The irony in Donald Trump's "fiduciary duty"
Commentary
Donald Trump claims it’s his “fiduciary duty” to his business, his family and his employees to pay no more tax than what’s legally required. While he may make some short-term arguing points, his statements might provide long-term problems for Republican lawmakers and for Trump himself.
Does being a fiduciary give Trump the right to pay little to no income taxes? From a strict legal perspective, this defense contains some elements of truth.
Here’s how law.com defines a fiduciary:
“A person (or a business, like a bank or stock brokerage) who has the power and obligation to act for another (often called the beneficiary) under circumstances which require total trust, good faith and honesty. The most common is a trustee of a trust, but fiduciaries can include business advisers, attorneys, guardians, administrators of estates, real estate agents, bankers, stockbrokers, title companies, or anyone who undertakes to assist someone who places complete confidence and trust in that person or company.”
You can argue that Trump is providing the maximum aftertax revenue to his business, family and employees by paying as little income tax as possible, and by doing so, he’s therefore carrying out his fiduciary responsibility.
But you could also argue that bragging about paying minimal taxes, while creating a short-term gain, is damaging his brand and image. This could create long-term damage to his business, family, employees and his campaign. Therefore, he could actually be neglecting his fiduciary responsibilities.
The strict legal definition isn’t the only interpretation that might matter to voters this fall, especially those who consider it a patriotic duty to pay taxes to support their nation’s spending on defense, security, health benefits, research and many other services needed to ensure Americans’ welfare.
Most taxpayers don’t have the resources that Trump has to avoid paying income taxes, and the taxes they pay can be substantial. This could cause significant resentment from millions of hard-working taxpayers who are dutifully paying their share of income taxes.
And here’s the thing that could be most upsetting to typical working Americans who pay their taxes: It’s particularly ironic that a Republican presidential candidate is using the fiduciary argument to justify his actions.
That’s because in April 2016, the U.S. Department of Labor (DOL) promulgated regulations that would require financial institutions and advisers to act as fiduciaries when making recommendations regarding the investment of retirement accounts that millions of Americans count on for their retirement security, such as IRAs and employer-sponsored plans like 401(k)s. The new rules require that these institutions and advisers act in the best interests of their customers when making their recommendations.
The financial industry is fiercely resisting the DOL’s fiduciary push, and Republican lawmakers are calling on to Trump to block these rules if he’s elected. In June, President Obama vetoed a congressional resolution that would have overturned them.
Apparently to some Republicans, it’s perfectly fine to use the fiduciary argument -- in fact, it’s “genius” -- to justify paying little or no taxes to support our country, but it’s not necessary for financial institutions and advisers to act as fiduciaries when helping millions of ordinary hard-working Americans with their retirement savings.
Fortunately, you have choices when it comes to managing your money. You can ask potential financial advisers if they’ll act as your fiduciary when making recommendations. Many will gladly take on this responsibility, but it’s your job to be a smart consumer and ask.
You can also act as your own fiduciary when voting this November -- in fact, it’s in your best interests to do so. Voting wisely should be part of every American’s retirement plan.