An explosive New York Times investigation reveals that President Donald Trump—a purported business-savvy billionaire whose name has adorned everything from steaks to golf courses to office towers—paid only $750 in taxes in 2016 and 2017.

Trump’s political opponents blasted him for the meager tax payments, but was their energy misplaced? William Dickens, university distinguished professor of economics and social policy at Northeastern, says that while the Times report outlines some “questionable deductions,” more generally, “Trump is just benefiting from a lot of legal deductions.”

According to the Times report, Trump claimed the majority of those deductions in the form of depreciation, a type of tax deduction based on the decreasing value of tangible assets—such as real estate—over time.

The report calls into question the extent to which Trump’s considerable real estate holdings actually depreciated. And indeed, Trump has been entangled in an audit by the federal Internal Revenue Service for nearly a decade.

But the mechanism itself—paying fewer and fewer taxes on assets that lose value over time—is a legal part of the tax code, designed to encourage capital investment, says Dickens, who is also a visiting scholar of the Federal Reserve Bank of Boston.

For tax purposes, Dickens says, assets will often depreciate faster than they actually lose value. It’s a system designed by Congress to incentivize people to buy things: “It’s cheaper in the long run for you to make an investment if you can write it off faster,” Dickens says.

“That’s the interesting thing about depreciation,” he says. “It’s been used as a policy lever.”

Dickens says parts of the U.S. tax code, such as depreciation, have been put together to accomplish certain policy—investment in real estate, in this case.

“But we have to ask: At what price? Has Congress struck the right balance?” he says. “It’s hard to argue that people are unfairly taking advantage of the tax code when Congress has set it up that way.”

Finding the right balance is important. Federal income tax revenue is funneled directly into the government’s general revenue fund, an account that’s used to pay for almost every federal program except social security benefits and Medicare, Dickens says.

“Almost anything you can think of that the federal government does is funded by revenue that is overwhelmingly income tax,” he says.

Dickens listed a dizzying array of services, including the military, park services, the court system, Medicaid, unemployment benefits, federal housing programs, small business loans, and agricultural funding, that are funded in large part by income tax revenue. And that’s not even half of it.

“If you put the government budget in front of me, I could be reading for a week,” he says.

For media inquiries, please contact Marirose Sartoretto at m.sartoretto@northeastern.edu or 617-373-5718.