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Title: Trump Isn’t a Self-Made Man. His Wealth Is the Product of Years of Government Subsidies.
Source: Reason
URL Source: https://reason.com/blog/2018/10/08/ ... p-finances-subsidies-tax-fraud
Published: Oct 8, 2018
Author: Peter Suderman
Post Date: 2018-10-09 05:45:01 by Deckard
Keywords: None
Views: 110
Comments: 3

The family real-estate business was powered by subsidies and cheap government-backed loans.

Last week The New York Times released a major investigative report into President Donald Trump's personal finances. The story, which took over a year to produce and relied on a massive trove of confidential documents, describes the accumulation of the Trump family's real estate fortune and the mechanisms that Trump's father, Fred C. Trump, used to pass wealth on to his children, with Trump receiving an outsized share. The story is relevant because the president's refusal to release his tax returns has left the public with few detailed glimpses into his financial dealings.

The report makes a strong case that Trump's public claims to being wealthy as a result of his business acumen ("I built what I built myself") are a myth created by Trump and abetted by allies in the media.

Trump has said that he built his empire with a "very small" $1 million loan from his father. The Times reports that, in fact, Fred funneled some $413 million to his son over the years, keeping him afloat through an array of splashy but disastrous real-estate investments that collapsed in a series of high-profile bankruptcies. The report also advances the idea that the generational transfer of wealth was illegal, accusing Trump in the very first sentence of having participated in "outright fraud."

Although it is not the focus of the story, the Times also makes clear that Trump's father—and subsequently Trump himself—amassed a real estate fortune in large part by taking advantage of various government-backed real estate loans and subsidies.

"Fred Trump would become a millionaire many times over by making himself one of the nation's largest recipients of cheap government-backed building loans," the report says, citing Gwenda Blair's book The Trumps: Three Generations of Builders and a President. And the elder Trump passed on both the knowledge of how to use subsidized loans for personal profit and the profits themselves to his son:

Fred Trump began taking steps that enriched Donald alone, introducing him to the charms of building with cheap government loans. In 1972, father and son formed a partnership to build a high-rise for the elderly in East Orange, N.J. Thanks to government subsidies, the partnership got a nearly interest-free $7.8 million loan that covered 90 percent of construction costs. Fred Trump paid the rest. But his son received most of the financial benefits, records show.

Within just a few years, the younger Trump was earning the contemporary equivalent of $305,000 annually from the project. Government subsidies combined with parental largesse made his early earnings effectively a free ride.

I am highly sympathetic to the view that individuals should be free to structure their finances however they please, within the limits of the law, to pay as little tax as possible. But the Times' reporting suggests that Trump did not merely bend the law—he broke it. The front-loaded description of Trump's behavior as fraudulent, without any caveat, indicates the Times' confidence in its work, especially given how litigious Trump has been in response to media reports on his personal life.

Nor should be it be overlooked that the alleged tax dodging was focused on avoiding the estate tax; no less than James Buchanan, an eminence of libertarian economics, has argued for a 100 percent inheritance tax.

But even if you are unmoved by the charges of tax dodging, the report nonetheless effectively dismantles Trump's self-serving mythology. It makes clear that Trump is not a successful businessman; he is a successful financial sponge—off his father, and off the government subsidies that enabled the family real estate empire to grow in the first place.

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#1. To: Deckard (#0)

Drumpf's "success" flows from his association with the [redacted] Mafia.

Grandpoodle was a pimp, daddy was a profiteer - and the amoral apple didn't fall far from the tree.

VxH  posted on  2018-10-09   6:42:45 ET  (1 image) Reply   Trace   Private Reply  


#2. To: Deckard (#0)

Nor should be it be overlooked that the alleged tax dodging

Alleged tax dodging? How about REAL tax dodging? Where's the reason.com's expose on Pritzker?

"Illinois Democratic gubernatorial nominee J.B. Pritzker has steadfastly defended the $330,000 property tax break he got in part by disabling the toilets in a Gold Coast mansion he owns." He removed all five toilets in the mansion, declared it "unihabitable", and got a lower property valuation.

Now that he's caught, he's going to repay the money. Where are the criminal charges? What if I did that?

misterwhite  posted on  2018-10-09   8:43:30 ET  Reply   Trace   Private Reply  


#3. To: Deckard (#0)

Last week The New York Times released a major investigative report into President Donald Trump's personal finances. The story, which took over a year to produce and relied on a massive trove of confidential documents, describes the accumulation of the Trump family's real estate fortune and the mechanisms that Trump's father, Fred C. Trump, used to pass wealth on to his children, with Trump receiving an outsized share. The story is relevant because the president's refusal to release his tax returns has left the public with few detailed glimpses into his financial dealings.

The failing New York Times:

But The Times’s investigation, based on a vast trove of confidential tax returns and financial records, reveals that Mr. Trump received the equivalent today of at least $413 million from his father’s real estate empire, starting when he was a toddler and continuing to this day.

Fred Trump died in 1999. The gift giving to Donald Trump that started when he was a toddler assuredly ended almost 20 years ago.

The story is relevant because the president's refusal to release his tax returns has left the public with few detailed glimpses into his financial dealings.

The failing New York Times:

The findings are based on interviews with Fred Trump’s former employees and advisers and more than 100,000 pages of documents describing the inner workings and immense profitability of his empire. They include documents culled from public sources — mortgages and deeds, probate records, financial disclosure reports, regulatory records and civil court files.

That's Fred, as in not Donald.

The failing New York Times:

Most notably, the documents include more than 200 tax returns from Fred Trump, his companies and various Trump partnerships and trusts. While the records do not include the president’s personal tax returns and reveal little about his recent business dealings at home and abroad, dozens of corporate, partnership and trust tax returns offer the first public accounting of the income he received for decades from various family enterprises.

The records do not include any of Donald Trump's tax returns.

The records reveal little about Donald Trump's recent business dealings at home and abroad, i.e., anywhere in the world. Fred Trump has not filed a tax return in this century. Fred Trump has not been alive in this century.

With precisely ZERO of the "president’s personal tax returns" and with "little about his recent business dealings at home and abroad," Reason's retread of a story by the failing New York Times "is relevant because the president's refusal to release his tax returns has left the public with few detailed glimpses into his financial dealings."

The report makes a strong case that Trump's public claims to being wealthy as a result of his business acumen ("I built what I built myself") are a myth created by Trump and abetted by allies in the media.

Trump has said that he built his empire with a "very small" $1 million loan from his father. The Times reports that, in fact, Fred funneled some $413 million to his son over the years, keeping him afloat through an array of splashy but disastrous real-estate investments that collapsed in a series of high-profile bankruptcies.

The Donald has amassed a multi-billion dollar fortune. Fred Trump was never a billionaire and never had anything like The Donald's fortune to give. Fred Trump made his fortune in Queens. Donald Trump made his fortune in the very different world of Manhattan. Donald Trump is one of the richest persons in America. Deal with it.

https://en.wikipedia.org/wiki/Fred_Trump

Wealth and estate

[Fred] Trump appeared on the initial Forbes 400 list of richest Americans in 1982 with an estimated $200 million fortune shared with his son Donald. In 1976, Trump had set up trust funds of $1 million for each of his five children and three grandchildren ($4.3 million in 2017 dollars), that paid out yearly dividends. By 1993, the siblings' anticipated shares of Trump's estate amounted to $35 million each. Upon Trump's death in 1999, his will divided $20 million after taxes among his surviving children.

In October 2018, The New York Times published an exposé drawing on more than 100,000 pages of tax returns and financial records from Trump's businesses, and interviews with former advisers and employees. The Times concluded that his son Donald "was a millionaire by age 8," and that he had received $413 million (adjusted for inflation) from Fred's business empire over his lifetime. According to the Times, Trump loaned at least $60 million to his son, who largely failed to reimburse him. The paper also described a number of purportedly fraudulent tax schemes, for example when Trump sold shares in Trump Palace condos to his son well below their purchase price, thus masking what could be considered a hidden donation, and benefiting from a tax write-off. Donald Trump's lawyer denied the allegations of fraud and tax evasion, while the New York tax department stated they would investigate the issue.

The failing New York Times

By age 3, Mr. Trump was earning $200,000 a year in today’s dollars from his father’s empire. He was a millionaire by age 8. By the time he was 17, his father had given him part ownership of a 52-unit apartment building. Soon after Mr. Trump graduated from college, he was receiving the equivalent of $1 million a year from his father. The money increased with the years, to more than $5 million annually in his 40s and 50s.

"March 1988: The New York Times says Trump is worth $3 billion...."

Donald J. Trump was already a billionaire in the 1980s. His 40s did not begin until 1986 and his 50s began in 1996. Donald Trump would have had to receive $5M a year for 200 years, and save it all, to accumulate $1 billion from gifts. That 200 years of largesse still would not explain his multi-billionaire status.

The failing New York Times:

Much of his [Fred Trump's] giving was structured to sidestep gift and inheritance taxes using methods tax experts described to The Times as improper or possibly illegal. Although Fred Trump became wealthy with help from federal housing subsidies, he insisted that it was manifestly unfair for the government to tax his fortune as it passed to his children. When he was in his 80s and beginning to slide into dementia, evading gift and estate taxes became a family affair, with Donald Trump playing a crucial role, interviews and newly obtained documents show.

The line between legal tax avoidance and illegal tax evasion is often murky, and it is constantly being stretched by inventive tax lawyers. There is no shortage of clever tax avoidance tricks that have been blessed by either the courts or the I.R.S. itself. The richest Americans almost never pay anything close to full freight. But tax experts briefed on The Times’s findings said the Trumps appeared to have done more than exploit legal loopholes. They said the conduct described here represented a pattern of deception and obfuscation, particularly about the value of Fred Trump’s real estate, that repeatedly prevented the I.R.S. from taxing large transfers of wealth to his children.

The description is of gifts given by Fred Trump (inheriting is not a recurring act) to Donald Trump since Donald was a toddler, and the undervaluing of the given assets, resulting in an underpayment of the applicable gift tax, assertedly constituting fraud.

Fred Trump, who used to gift, and was potentially liable both civilly and criminally for any associated gift tax evasion, died in 1999. I wish New York the best of luck in pursuing Fred Trump for allegedly evading the gift tax.

Donald Trump, as the receiver of gifts, is not liable for any undervaluing by the donor on the donor's tax returns, resulting in the donor wrongfully evading full payment of gift tax obligations.

I am highly sympathetic to the view that individuals should be free to structure their finances however they please, within the limits of the law, to pay as little tax as possible. But the Times' reporting suggests that Trump did not merely bend the law—he broke it. The front-loaded description of Trump's behavior as fraudulent, without any caveat, indicates the Times' confidence in its work, especially given how litigious Trump has been in response to media reports on his personal life.

Perhaps Fred Trump did not merely bend the law but broke it. It is not possible to libel a dead person. Perhaps the failing Times has cause to be confident they will not be sued for libel by Fred Trump, who allegedly undervalued gifts given to his son, Donald, beginning when Donald was age 2. As the gift recipient, baby or toddler Donald participated in the possible fraud.

Donald J. Trump has been audited by the IRS every year for decades.

nolu chan  posted on  2018-10-09   16:44:32 ET  Reply   Trace   Private Reply  


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