WSJ: “”Trump Family Finance” (But no Russian $$$!)

This is from yesterday's Journal email. That the NYT – one of the world's great nepotist organizations – would criticize the Trump Family nepotism version is a riot. It took them a year, but how did they acquire confidential tax docs? You can be sure the Trump family and Trump organization is subject to audit every year. Note the Forbes article bit at the end.

Being Fred Trump’s son was good for business. Being President, not so much.

Last year MSNBC anchor Rachel Maddow revealed tax data suggesting that Donald Trump is not nearly as good as Warren Buffett when it comes to avoiding federal income taxes. But what abo ut Mr. Trump’s late father Fred? The New York Times is out with a story claiming that the Trump family patriarch went way too far to avoid taxes as he transferred significant wealth to his children, especially Donald.

Meanwhile, according to a new analysis in Forbes magazine, the frequently aired media speculation that the Trump family business is benefiting from the Trump presidency has it exactly backwards. Politics appears to be a commercial killer.

No surprise, the New York Times story is the one getting most of the attention today. According to the Times:

Mr. Trump won the presidency proclaiming himself a self-made billionaire, and he has long insisted that his father, the legendary New York City builder Fred C. Trump, provided almost no financial help.

But The Times’s investigation, bas ed 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.

Much of this money came to Mr. Trump because he helped his parents dodge taxes. He and his siblings set up a sham corporation to disguise millions of dollars in gifts from their parents, records and interviews show. Records indicate that Mr. Trump helped his father take improper tax deductions worth millions more. He also helped formulate a strategy to undervalue his parents’ real estate holdings by hundreds of millions of dollars on tax returns, sharply reducing the tax bill when those properties were transferred to him and his sib lings.

Tax lawyers and accountants can now debate the particulars. Regardless, the Times story makes a forceful argument that estate taxes encourage wealthy entrepreneurs to pursue complicated schemes to shield their fortunes. Since the Times piece claims that Fred Trump’s building projects were often supported by government programs, the story also makes a strong case that housing subsidies sold by politicians in the name of keeping housing “affordable” often end up enriching property owners who are hardly in need of assistance. Unfortunately, you won’t find these lessons in a list of Times “Takeaways” from the paper’s inquiry into Trump family finances.

Was the President’s father a crook? The Times notes:

In a statement on behalf of the Trump family, the president’s brother, Robert Trump, said, “All appropriate gift and estate tax returns were filed, and the required taxes were paid.”

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Fred Trump was the ultimate dad when it came to helping his son succeed in real estate. As for whether the elder Trump’s tax avoidance crossed the line into evasion, we can’t get his side of the story because he died in June of 1999. This also means that a libel suit can no longer be filed on his behalf.

In any case, the real estate empire created by Fred Trump and now owned by his son does not appear to be mixing well with politics. Forbes magazine reports on leaner times at Trump Tower:

Nike abandoned its attached flagship store earlier this year, and Ivanka Trump’s accessories business closed up shop as well. What’s left is basically nothing but Gucci, Starbucks and The Donald, wall-to-wall. Trump Bar sits atop Trump Grille, next to Trump Café, the Trump Store and Trump’s Ice Cream. It is unlikely Trump pays himself rent for any of them. “Things are all different now,” [Trump Organization executive Barbara Res] says.

That difference includes profits. Net operating income dropped 27% between 2014, the year before Trump announced his run for president, and 2017, his first year in the White House. When the real estate mogul descended the escalator to launch his campaign, in this very building, no one could have predicted the chain of events that would lead to this point…

While the experiment continues to unfold, in real time, the early results are in. Much as he’s trying—and he’s definitely trying—Donald Trump is not getting richer off the presidency. Just the opposite. His net worth, by our calculation, has dropped from $4.5 billion in 2015 to $3.1 billion the last two years, knocking the president 138 spots lower on the Forbes 400.