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Trump Tax Plan Has Major Implications for Obesity and Tax Administration

Posted on Apr. 1, 2016

Presidential contender Donald Trump is no stranger to controversy. He is definitely not wedded to past policies. The media has been highly critical of many of his proposals, including his calling for dismantling NATO, supporting nuclear weapons for Japan and South Korea, tearing up trade agreements and building a wall along the Mexican border.

When it comes to taxes that too has generated controversy though somewhat less media scrutiny. His campaign has not released Mr. Trump’s individual returns, though in light of some public pressure this week it did release a letter from his counsel at Morgan Lewis regarding the status of individual tax examinations since 2002 (Trump has referred to the IRS audits as the reason why he would not release his returns). The campaign has released a few details on its tax plan. While the tax plan contains much in the way of traditional tax proposals candidate Trump has been outspoken about some issues that he believes the tax system should address, including obesity.

On the trail, candidate Trump has discussed fitness and obesity, turning around questions that have suggested he has insulted people (mainly women) because of their weight. For example, last fall while campaigning in North Dakota a reporter asked about obesity in America. See Trump on Obesity: “I’ll Build Weight Loss Clinics and Force Rosie O’Donnell to Pay For It”:

Mr. Trump you often ridicule women for being overweight,” asked correspondent Bruce Nolan, “But obesity is a serious medical condition that affects millions of Americans. What would your plan be to fight this epidemic?

Trump responded in the Trump on Obesity article by both acknowledging the real medical problem and identifying (in his own colorful way) some solutions:

“I would build a nationwide network of weight loss clinics and I would force Rosie O’Donnell to pay for it.” I looked this up the other day, and I couldn’t believe it — Rosie O’Donnell is worth $100 million.  $100 million! How does someone with no talent make that kind of money? But it’s true. That’s what she has.”

“And we could do so many great things with that money. Not just weight-loss clinics. But also exercise programs. Community vegetable gardens. Reforming dietary guidelines, so we can teach our kids how to eat properly.”

“And frankly I think Rosie should pay for all of this because she’s setting a bad example. She gets on TV looking like a taste tester at a donut factory. And women all across America say to themselves ‘it’s okay to be a fat slob. I can still be rich and on television’.”

“Well it’s not okay. Obesity is a serious issue and it’s killing our nation. And millions of women are fat in this country because of Rosie O’Donnell. Millions. So yes we’re going to solve obesity. We’re going to create the biggest, most efficient nationwide weight-loss program the Earth has ever seen. It’s gonna be huge. And you better believe Rosie will pay for it.”

Well, we all know that promises on the campaign trail, especially early in the primary season, sometimes evolve. Frontrunner Trump is still pushing weight loss clinics, but now the idea is to spur demand in the clinics by providing refundable tax credits to individuals who enroll in weight loss clinics and who actually lose weight.

More from Trump:

My people tell me that obesity is killing America. Literally. It is simple. Americans are too fat. It costs us billions in terms of time off from work and shortened life spans and crazy medical costs (not to mention how gross so many of us look). Americans have to get healthier. Now I respect people like Bloomberg and others who want to get there by taxing things like sodas. He is a great businessman. But what we need to solve this problem are incentives not penalties.

How does this connect to tax procedure (and Rosie O’ Donnell)? Trump explains:

My idea is to provide a tax credit that will reward obese people who enroll in certified weight loss clinics and who lose a set amount of weight. It will be tremendous. We will partner with the private sector. Places like Curves; Gary Heavin, who founded Curves, is a tremendous businessman. He tells me we can do so much more getting people healthier. While she can’t pay for this out of her pockets we have to get Rosie in here somehow. So what I suggest is a $1,000 credit that we will call the Reducing Obesity Sensibly and Intelligently Everywhere (ROSIE) tax credit. For people who are considered obese this will push them to do what they need. At the end of the day, it will save us billions in health costs that now all of us pay for.

There is not much in the way of details on the ROSIE credit but one can imagine all sorts of issues in terms of the IRS administering it. For example, one assumes that only certain clinics would be eligible, and that the clinics themselves would have to report the weight to the IRS and the people via an annual information return. There would also have to be a baseline weight (sort of like basis, I guess) that would be a starting point for eligibility. That baseline would likely change annually, which would require some sort of official weigh in (one can imagine a reality show around that). Perhaps the credit will include a proviso for repayment if the weight loss is temporary; that would raise questions about collection and whether like Obamacare the IRS would have only limited collection powers in collecting a defaulted ROSIE credit.

So while candidate Cruz talks about abolishing the IRS, candidate Sanders talks about taxing the heck out of Wall Street, and candidate Clinton talks about policy papers so intricate they are difficult for even tax lawyers to understand, candidate Trump has proposed a straightforward idea which may, however, raise new tax procedure issues. We look forward to helping you though the procedural challenges this proposal may engender. Stay tuned.

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