Brokeahontas

On his weekly show on HBO, Bill Maher joked that since the NY Times reported that president Trump may have shown a billion dollars of tax losses in the late 80's and early 90's, Elizabeth Warren should start calling him Brokeahontas.  It's a funny line.  It misses the point of tax losses, however.  Any successful real estate developer during that time would have likely had massive tax losses even while making good money.  The nature of the way real estate is treated for tax purposes results in a big amount of non-cash losses for the developer.  In other words, expensive new properties don't actually need massive expenditures for repairs and replacement of the building or its systems, but depreciation is available as a major cost for tax purposes nevertheless.  These are tax losses, but not actual out of pocket costs.  Because there are so many of these non-cash losses, developers all have massive amounts to use on their tax returns.  During the period in question, the losses of this sort available to developers were even higher than now.  That's why Trump could have such a high number of losses for tax purposes.

The weird thing today is the discussion on social media where people who don't understand how taxes work are talking about how Trump is actually broke.  It's bizarre.  Maher's joke is funny.  The discussion on Twitter and elsewhere is stupid.