Donald Trump and his family engaged in legally questionable tax practices for decades, according to a recent New York Times investigation. Collectively, all of the schemes the Times described amounted to approximately $413 million in taxes that went into Trump’s pockets (in inflation-adjusted dollars), rather than the U.S. Treasury.
The Times’ David Barstow, Susanne Craig, and Russ Buettner combed through approximately 100,000 pages of financial records and other documents to piece together the various dubious dodges laid out in the 14,000-word piece, which took approximately 18 months to write.
While the investigation lays out every tax avoidance scheme the Trumps employed over the last several decades in painstaking detail, there are a few major takeaways that will likely prompt a stern rebuke from President Trump at some point in the near future.
Donald Trump’s father, Fred, was also a real estate tycoon in New York who had subsidized his son’s businesses every step of the way, and brought him out of arrears more than once. On the campaign trail, then-candidate Trump boasted that the Trump Organization was a real estate empire he built brick-by-brick after getting just a $1 million loan from his father, which he paid back with interest.
However, the Times revealed that Fred Trump actually loaned his son more than $60 million (or $140 million in today’s dollars), most of which was never paid back. Many of these loans were made to bail Trump out of bad debts he incurred when various hotels, casinos, and other real estate Donald Trump bought and developed in New York and New Jersey went belly-up.
These loans weren’t made by Fred Trump directly, but through other legal entities he created for the sole purpose of bailing out his son, so the Internal Revenue Service (IRS) wouldn’t see the money as a taxable gift. One such bailout was for Trump’s Castle casino in Atlantic City, New Jersey in 1990. As the Times described, Fred dispatched a bookkeeper to buy $3.5 million in casino chips without making any bets in order to prevent his son from defaulting on bonds. The move was seen as an illegal loan by state gaming authorities, who charged Trump’s father with a civil penalty and $65,000 in fines.
When the elder Trump was ailing in his latter years, Donald Trump allegedly concocted various complex schemes to have the bulk of his father’s estate go to him. Trump’s mother and father were able to avoid hundreds of millions of dollars in inheritance taxes (which was 55 percent at the time) by passing gifts through numerous LLCs and other companies controlled by the Trump family that looked like investments, rather than gifts.
Much of the wealth Donald Trump inherited from his parents was severely undervalued, allowing him to avoid paying all but a fraction of the taxes owed. The Times reported that the total value of the apartment complexes and other real estate developments Trump’s parents passed down was at just $41 million, though that same real estate was valued at more than $900 million in 2004, just five years after Fred Trump passed away.
It’s not clear whether or not the IRS is planning on taking action, and it remains unclear whether or not the aforementioned activities are, in fact, fraudulent, without a thorough IRS investigation. However, the Trump Organization is currently under investigation for allegedly violating campaign finance laws in regard to “hush money” payments Trump made to two women who say they had affairs with him. Trump Organization chief financial officer Allen Weisselberg has been granted immunity in that investigation.
In a statement responding to the investigation, President Trump’s lawyer, Charles Harder, called the report false, inaccurate, and defamatory. Trump himself did not respond to requests for comment. As of this writing, he has not yet responded, though he is expected to comment on it during a Tuesday evening campaign rally in Mississippi. Trump continues to resist calls to publicly release his tax returns.
Logan Espinoza is a freelance contributor specializing in economic issues. He lives in Phoenix, Arizona with his wife and daughter. Contact him at logan DOT espinoza AT yahoo DOT com.