Allegra Kirkland contributed reporting.
In a lengthy investigation involving tens of thousands of public and confidential documents, including “more than 200 tax returns from Fred Trump, his companies and various Trump partnerships and trusts,” The New York Times reported Tuesday that the President engaged in “dubious tax schemes,” including “outright fraud,” which he used to maximize “the fortune he received from his parents.”
Citing an “unprecedented” reporting effort which documented hundreds of revenue streams, the Times offered a straightforward conclusion, one at odds with nearly everything Trump has said publicly about the financial assistance he received from his family: “In every era of Mr. Trump’s life, his finances were deeply intertwined with, and dependent on, his father’s wealth.”
“The Tax Department is reviewing the allegations in the NYT article and is vigorously pursuing all appropriate avenues of investigation,” James Gazzale, a spokesperson for the New York State Department of Taxation and Finance, told TPM in a statement.
Trump attorney Charles Harder called the report “100 percent false, and highly defamatory” and said it was based on “extremely inaccurate” information, adding that Trump “had virtually no involvement whatsoever with these matters.” Trump’s brother Robert Trump told the Times, on the family’s behalf: “All appropriate gift and estate tax returns were filed, and the required taxes were paid.”
Fred Trump’s assistance to his son started early, the Times reported, with huge cash gifts, a “flood” of millions of dollars in loans (“many” never paid back), trust funds, ownership interests in buildings, salaried positions and other financial help for Donald Trump beginning at a young age. Fred Trump gave his son money to establish his own businesses, including for leases, cars, stocks and employees’ salaries.
At every step, Fred Trump, and eventually Donald Trump, avoided gift and inheritance taxes in ways experts told the Times were “improper or possibly illegal,” though there’s little chance Trump faces criminal consequences now, years later. Indeed, the Times reported, “these maneuvers met with very little resistance from the IRS along the way.”
One consistent avoidance tactic, the Times reported, involved severely underestimating the value of Fred Trump’s empire to avoid a high tax bill.
When the elder Trump transferred his business to his children, the Trump kids valued a collection of buildings they’d received at $41.4 million. Those same buildings, the Times reported, would cumulatively be sold for a 16-fold increase over that number. How Fred Trump avoided gift taxes on various apartment transfers is “unclear,” the Times said.
Another “overt fraud,” in the Times’ surprisingly blunt language, involved a Trump company established to purchase supplies for the empire, but which in reality “simply mark[ed] up purchases already made by his employees,” leading to millions in untaxed transfers.
Tactics abound: For example, Fred Trump would buy his own mortgages from the banks lending him money and transfer ownership of the debt to his children. They, in essence, would become his bankers, collecting interest on the loans. In other instances, he converted his buildings into cooperatives so that his children could benefit from an influx of cash.
In 2004, Fred Trump’s children sold off his empire. Donald Trump received $177.3 million, the Times reported, “or $236.2 million in today’s dollars.”
Read the Times’ much more comprehensive investigation here.
This post has been updated.
Read More →