There is little that’s shocking in the latest New York Times expose, which revealed Donald Trump and his family were handed hundred million dollar inheritances as they schemed to avoid taxes.
Despite Trump’s boast to being a self-made billionaire, he was “born on third base,” inheriting a real estate empire from his father along with connections and other forms of social capital. We can speculate as to how much of this self-made myth is self-deception, brand-building, or amnesia.
Previous research shows that Trump benefited from loans and financial connections to his father’s real estate empire. But the Times’ investigative report, “Trump Took Part in Suspect Schemes to Evade Income Tax Bills,” reveals previously undisclosed ways that patriarch Fred Trump’s wealth was passed to Donald Trump and his siblings, intentionally designed to avoid estate and gift taxes.
The Times estimates that Trump received at least $413 million, in today’s dollars, from his father’s real estate business, a sum that’s significantly higher than previous approximations.
Trump’s lawyer and spokesperson, Charles Harder, said the Times report was false and defamatory and distanced Trump from the tax evasion schemes. “The affairs were handled by other Trump family members who were not experts themselves and therefore relied entirely upon the aforementioned licensed professions to ensure full compliance with the law,” Harder said in a statement.
And Harder has a point. Teams of professionals are required to manipulate valuations of properties and create elaborate tax dodges, known as GRATs (Granter Retained Annuity Trusts). These are techniques are used by other billionaires, including casino magnate Sheldon Adelson, who used GRATs to avoid $2.8 billion in estate taxes.
The Trump family also used a number of potentially fraudulent methods to funnel funds from Fred Trump’s real estate operations to family members while reducing taxes. Beginning in 1994, the family used several companies, ostensibly set up for property management and building supplies, to transfer millions in cash from Fred Trump to his children.
One company, All County Building Supply & Maintenance, purchased supplies, such as furnaces, and sold them to Trump-owned buildings, taking a mark-up of over 20 to 25 percent. The company, owned by four Trump children and a nephew, distributed the profits to themselves, reducing Fred Trump’s income and future estate taxes.
These schemes also enabled Fred Trump to raise rents in New York City rent-stabilized buildings by showing inflated invoices for building supplies and services.
But Trump is really no different than hundreds of other billionaires and centi-millionaires around the world who use aggressive techniques to hide money, reclassify and reappraise assets, and dodge and evade taxes.