Here are two conditions the Democrat should set.
I worry about Joe Biden debating Donald Trump. He should do it only under two conditions. Otherwise, he’s giving Trump unfair advantages.
First, Biden should declare that he will take part in a debate only if Trump releases his tax returns for 2016 through 2018. Biden has already done so, and they are on his website. Trump must, too. No more gifting Trump something he can attack while hiding his own questionable finances.
And second, Biden should insist that a real-time fact-checking team approved by both candidates be hired by the nonpartisan Commission on Presidential Debates — and that 10 minutes before the scheduled conclusion of the debate this team report on any misleading statements, phony numbers or outright lies either candidate had uttered. That way no one in that massive television audience can go away easily misled.
Debates always have ground rules. Why can’t telling the truth and equal transparency on taxes be conditions for this one?
Yes, the fact that we have to make truth-telling an explicit condition is an incredibly sad statement about our time; normally such things are unspoken and understood. But if the past teaches us anything, Trump might very well lie and mislead for the entire debate, forcing Biden to have to spend a majority of his time correcting Trump before making his own points.
That is not a good way for Biden to reintroduce himself to the American people. And, let’s not kid ourselves, these debates will be his reintroduction to most Americans, who have neither seen nor heard from him for months if not years.
Because of Covid-19, Biden has been sticking close to home, wearing a mask and social distancing. And with the coronavirus now spreading further, and Biden being a responsible individual and role model, it’s likely that he won’t be able to engage with any large groups of voters before Election Day. Therefore, the three scheduled televised debates, which will garner huge audiences, will carry more weight for him than ever.
He should not go into such a high-stakes moment ceding any advantages to Trump. Trump is badly trailing in the polls, and he needs these debates much more than Biden does to win over undecided voters. So Biden needs to make Trump pay for them in the currency of transparency and fact-checking — universal principles that will level the playing field for him and illuminate and enrich the debates for all citizens.
Of course, Trump will stomp and protest and say, “No way.” Fine. Let Trump cancel. Let Trump look American voters in the eye and say: “There will be no debate, because I should be able to continue hiding my tax returns from you all, even though I promised that I wouldn’t and even though Biden has shown you his. And there will be no debate, because I should be able to make any statement I want without any independent fact-checking.”
If Trump says that, Biden can retort: “Well, that’s not a debate then, that’s a circus. If that’s what you want, why don’t we just arm wrestle or flip a coin to see who wins?”
I get why Republican senators and Fox News don’t press Trump on his taxes or call out his lies. They’re afraid of him and his base and unconcerned about the truth. But why should Biden, or the rest of us, play along?
After all, these issues around taxes and truth are more vital than ever for voters to make an informed choice.
Trump, you will recall, never sold his Trump Organization holdings or put them into a blind trust — as past presidents did with their investments — to avoid any conflicts of interest. Rather, his assets are in a revocable trust, whose trustees are his eldest son, Donald Jr., and Allen Weisselberg, the Trump Organization’s chief financial officer. Which is a joke.
Trump promised during the last campaign to release his tax returns after an I.R.S. “audit” was finished. Which turned out to have been another joke.
Once elected, Trump claimed that the American people were not interested in seeing his tax returns. Actually, we are now more interested than ever — and not just because it’s utterly unfair that Biden go into the debate with all his income exposed (he and his wife, Jill, earned more than $15 million in the two years after they left the Obama administration, largely from speaking engagements and books) while Trump doesn’t have to do the same.
There must be something in those tax returns that Trump really does not want the American public to see. It may be just silly — that he’s actually not all that rich. It may have to do with the fact that foreign delegations and domestic lobbyists, who want to curry favor with him, stay in his hotel in Washington or use it for corporate entertaining.
Or, more ominously, it may be related to Trump’s incomprehensible willingness to give Russian President Vladimir Putin the benefit of every doubt for the last three-plus years. Virtually every time there has been a major public dispute between Putin and U.S. intelligence agencies alleging Russian misdeeds — including, of late, that the Kremlin offered bounties for the killing of U.S. soldiers in Afghanistan — Trump has sided with Putin.
The notion that Putin may have leverage over him is not crazy, given little previous hints by his sons.
As Michael Hirsh recalled in a 2018 article in Foreign Policy about how Russian money helped to save the Trump empire from bankruptcy: “In September 2008, at the ‘Bridging U.S. and Emerging Markets Real Estate’ conference in New York, the president’s eldest son, Donald Jr., said:
‘In terms of high-end product influx into the United States, Russians make up a pretty disproportionate cross-section of a lot of our assets. Say, in Dubai, and certainly with our project in SoHo, and anywhere in New York. We see a lot of money pouring in from Russia.’”
The American people need to know if Trump is in debt in any way to Russian banks and financiers who might be close to Putin. Because if Trump is re-elected, and unconstrained from needing to run again, he will most likely act even more slavishly toward Putin, and that is a national security threat.
At the same time, debating Trump is unlike debating any other human being. Trump literally lies as he breathes, and because he has absolutely no shame, there are no guardrails. According to the Fact Checker team at The Washington Post, between Trump’s inauguration on Jan. 20, 2017, and May 29, 2020, he made 19,127 false or misleading claims.
Biden has been dogged by bone-headed issues of plagiarism in his career, but nothing compared to Trump’s daily fire hose of dishonesty, which has no rival in U.S. presidential history. That’s why it’s so important to insist that the nonpartisan Commission on Presidential Debates hire independent fact-checkers who, after the two candidates give their closing arguments — but before the debate goes off the air — would present a rundown of any statements that were false or only partly true.
Only if leading into the debate, American voters have a clear picture of Trump’s tax returns alongside Biden’s, and only if, coming out of the debate, they have a clear picture of who was telling the truth and who was not, will they be able to make a fair judgment between the two candidates.
That kind of debate and only that kind of debate would be worthy of voters’ consideration and Biden’s participation.
Otherwise, Joe, stay in your basement.
A federal judge in New York on Monday ruled President Trump’s accounting firm must turn over eight years of his personal and business tax returns, an order immediately put on hold by an appeals court.
The decision came in a lawsuit filed by Mr. Trump against Manhattan District Attorney Cyrus Vance Jr. and Mazars USA LLP, his longtime accounting firm. Mr. Trump sought to block a subpoena for his tax returns that state prosecutors sent to the accounting firm, saying it was unconstitutional to subject a sitting president to what he called the “criminal process.”
SHARE YOUR THOUGHTS
Do you think a president should be immune from criminal investigations while in office? Why or why not? Join the conversation below.
Mr. Trump’s lawyers filed an emergency appeal minutes after the ruling, leading a judge from the Second U.S. Circuit Court of Appeals to put the ruling temporarily on hold “because of the unique issues raised by this appeal.” Mr. Vance’s office asked the court to hear arguments on the matter this week, but it isn’t clear when the panel will rule.
Mr. Vance’s office sent the subpoena to Mazars in August as part of its probe into whether payments made to adult-film actress Stormy Daniels, and how these payments were recorded, violate a state law against falsifying business records.
In his ruling, U.S. District Judge Victor Marrero rejected the idea that a president couldn’t be investigated while in office. “This Court cannot endorse such a categorical and limitless assertion of presidential immunity from judicial process,” wrote Judge Marrero, an appointee of President Bill Clinton.
The judge said he recognized that subjecting a president to certain criminal proceedings, such as imprisonment, would interfere with his official duties. But the idea that the president, his business entities, relatives and private activities are immune from any criminal process is too broad, he said.
“This Court finds aspects of such a doctrine repugnant to the nation’s governmental structure and constitutional values,” Judge Marrero wrote.
Responding to the ruling on Twitter, Mr. Trump wrote, “The Radical Left Democrats have failed on all fronts, so now they are pushing local New York City and State Democrat prosecutors to go get President Trump. A thing like this has never happened to any President before. Not even close! “
The Radical Left Democrats have failed on all fronts, so now they are pushing local New York City and State Democrat prosecutors to go get President Trump. A thing like this has never happened to any President before. Not even close!28K people are talking about this
A spokesman for Mr. Vance, a Democrat, declined to comment. Within minutes of the ruling, lawyers for Mr. Trump appealed the decision to the Second U.S. Circuit Court of Appeals.
Last week, the Justice Department weighed in on the case, asking the judge to temporarily block enforcement of the subpoena to allow for further consideration of the legal issues. The Justice Department lawyers also said the dispute should remain in federal court, not state court as requested by Mr. Vance’s office.
In a letter to the judge, prosecutors from Mr. Vance’s office said delaying enforcement of the subpoena would likely result in the statute of limitations expiring for state crimes under consideration. They asked Judge Marrero to dismiss the case. “The Plaintiff’s only goal in this litigation, now supported by the DOJ itself, is to obtain as much delay as possible, through litigation, stays, and appeals,” the state prosecutors wrote.
The state probe comes on the heels of a federal investigation into hush-money payments that concluded this summer. Trump lawyer Michael Cohen, who pleaded guilty to charges including violating campaign-finance laws as a result of that investigation, is now in federal prison.
Mr. Vance’s prosecutors have said the tax returns would remain confidential because they are part of a grand-jury proceeding. During a hearing, a lawyer for Mr. Trump said he didn’t think Mr. Vance’s office could make this promise.
“We do not know how the district attorney will respond to a subpoena from Congress,” said the lawyer, William Consovoy. “Would those secrecy laws trump that subpoena?”
Several disputes over Mr. Trump’s tax returns are making their way through federal courts.
A confidential Internal Revenue Service legal memo says tax returns must be given to Congress unless the president takes the rare step of asserting executive privilege, according to a copy of the memo obtained by The Washington Post.
The memo contradicts the Trump administration’s justification for denying lawmakers’ request for President Trump’s tax returns, exposing fissures in the executive branch.
Trump has refused to turn over his tax returns but has not invoked executive privilege. Treasury Secretary Steven Mnuchin has instead denied the returns by arguing there is no legislative purpose for demanding them.
But according to the IRS memo, which has not been previously reported, the disclosure of tax returns to the committee “is mandatory, requiring the Secretary to disclose returns, and return information, requested by the tax-writing Chairs.”
The 10-page document says the law “does not allow the Secretary to exercise discretion in disclosing the information provided the statutory conditions are met” and directly rejects the reason Mnuchin has cited for withholding the information.
“[T]he Secretary’s obligation to disclose return and return information would not be affected by the failure of a tax writing committee . . . to state a reason for the request,” it says. It adds that the “only basis the agency’s refusal to comply with a committee’s subpoena would be the invocation of the doctrine of executive privilege.”
“The memo is clear in its interpretation of the law that the IRS shall furnish this information,” said William Lowrance, who served for about two decades as an attorney in the IRS chief counsel’s office and reviewed the memo at the request of The Post.
Daniel Hemel, a professor at the University of Chicago Law School who also reviewed the memo for The Post, said the document suggests a split over Trump’s returns between career staffers at the IRS and political appointees at that agency and the Treasury Department.
“The memo writer’s interpretation is that the IRS has no wiggle room on this,” Hemel said. “Mnuchin is saying the House Ways and Means Committee has not asserted a legitimate legislative purpose. The memo says they don’t have to assert a legitimate legislative purpose — or any purpose at all.”
Last week, Mnuchin told a Senate panel that Treasury Department lawyers held an early discussion about disclosing the tax returns long before Democrats officially demanded the documents in April. He did not reveal details of that deliberation or say what, if any, legal memos he had reviewed.
Some legal experts have held that the law is clear in giving Congress the power to compel the provision of the returns. But other former government lawyers, including two who served in the Reagan and George H.W. Bush administrations, have argued that the law is unconstitutional and could lead to widespread abuses of taxpayer privacy for political aims.
The IRS memo describes how and why Congress has the authority to access tax returns, explaining the origin of the provision and how it has been interpreted over the decades.
It highlights the special powers given to three committees for compelling the release of tax returns: the House Ways and Means Committee, the Senate Finance Committee, and the Joint Committee on Taxation. Other congressional committees, the memo emphasizes, do not have the same authority.
When it comes to the Ways and Means Committee, the obligation to divulge the returns “would not be affected by the failure” to give a reason for the request. By contrast, other committees “must include a purpose for their request for returns and return information when seeking access,” the memo states.
“One potential basis” for refusing the returns, the memo states, would be if the administration invoked the doctrine of executive privilege.
But the IRS memo notes that executive privilege is most often invoked to protect information, such as opinions and recommendations, submitted as part of formulating policies and decisions. It even says the law “might be read to preclude a claim of executive privilege,” meaning the law could be interpreted as saying executive privilege cannot be invoked to deny a subpoena.
Earlier this month, the nonpartisan Congressional Research Service published a review of Section 6103 of the Internal Revenue Code that found the code “evinces no substantive limitations” on the Ways and Means Committee’s authority to receive the tax returns.
But, the CRS report added, the committee’s authority “arguably is subject to the same legal limitations that generally attach to Congress’ use of other compulsory investigative tools,” including the need to serve some “legislative purpose” and not breach constitutional rights.
Among Schiff’s new committee hires is Abigail C. Grace, who served as an Asia policy staffer on the National Security Council during the Trump administration until departing last spring for a Washington think tank.
At the Center for a New American Security, Grace worked as a research associate in the Asia-Pacific Security Program, a relatively junior-level position. She published essays on Asia policy and was quoted in news articles, including in The Washington Post, offering analysis about Trump’s Asia strategy. She announced her departure from the think tank last week and began work Monday on Schiff’s team, specializing in East Asia affairs, said people who know her.
.. “Although none of our staff has come directly from the White House, we have hired people with prior experience on the National Security Council staff for oversight of the agencies, and will continue to do so at our discretion,” the aide said.
A fluent Chinese speaker who accompanied Trump on his visit to five Asian countries in November 2017, Grace is expected to help the committee conduct oversight as the administration pursues high-stakes negotiations over North Korea’s nuclear weapons program and a trade war with China.
Grace was not a political appointee but rather a civil servant who started at the NSC working on Middle East affairs during the Obama administration in 2016, before switching to a focus on East Asia, said those familiar with her work. Her duties included assisting Matt Pottinger, the NSC’s senior Asia director who helps national security adviser John Bolton coordinate policy among the federal agencies and advise Trump.
.. Some senior Trump aides have privately expressed concern that Schiff’s hiring of former White House staff members is a bid for inside information that could be particularly damaging — a sign of the growing alarm over the president’s vulnerability in a new era of divided government.
But former staffers from the George W. Bush and Obama administrations, as well as longtime civil servants, said it was not unusual for government policy experts to leave and wind up advising or working for lawmakers.
“It happens every day,” said a Capitol Hill staffer who is not on Schiff’s committee. The staffer, who spoke on the condition of anonymity because of the sensitivity of the matter, rattled off a number of former Hill aides who had worked as policy experts in past administrations. “My understanding is that Schiff was going from the minority to the majority and had to staff up more fully. It’s the normal way things operate.”
.. Also on Thursday, the House held a hearing on obtaining Trump’s tax returns, listening to tax experts who discussed the impact of legislative language that would force presidential candidates to release 10 years of tax returns after they win their party’s nomination.
Three congressional officials are empowered legally to seek taxpayer information from the Treasury Department: the chairman of the Ways and Means Committee, the chairman of the Senate Finance Committee and the chairman of the Joint Committee on Taxation. But Rep. Mike Kelly (Pa.), the ranking Republican on the subcommittee that held the hearing, said Congress is barred from releasing tax returns for political purposes.
House Speaker Nancy Pelosi (D-Calif.), responding to criticism from liberals that the House leadership has not moved quickly enough to obtain Trump’s tax returns, said, “You have to be very, very careful if you go forward.”
“In terms of the tax issue, it’s not a question of just sending a letter,” Pelosi said. “I know there’s this impatience because people want to know, that answers the question, but we have to do it in a very careful way.”
A day after assuming the majority, House Democrats on Friday unveiled a sweeping ethics reform package that would put new checks on the White House and require President Donald Trump to release his tax returns.
House Democrats mostly presented the package — which contains numerous changes to campaign finance and ethics law — as a set of popular good-government reforms during a Friday press conference on Capitol Hill. But the bill’s proposed checks on Trump also will make it a useful cudgel for the new majority, even though the legislation is unlikely to be approved by the GOP-held Senate.
Rep. Elijah Cummings (D-Md.), incoming chairman of the House Committee on Oversight and Government Reform, indicated he will be stepping up oversight of Trump in the coming weeks.
.. The new bill would mandate that the president and vice president release 10 years of their tax returns. It would also enhance ethics rules for White House employees and give the Office of Government Ethics more enforcement power... Another change to campaign-finance law in the bill: A requirement that super PACs and other groups that spend more than $10,000 in an election disclose their donors within 24 hours. Nearly 70 super PACs found ways to delay disclosing their donors during the 2018 elections, according to a POLITICO analysis. The issue has gotten little attention from lawmakers, and activists in contact with House Democrats initially said it wouldn’t be addressed in the bill.
But one of the key points at which superstition and reason part company is the fact that superstition is non-falsifiable. If the king sacrifices an ox to Baal in the hope he will end the draught, and it rains, Baal will get the credit for the rain. If it doesn’t rain, Baal doesn’t get the blame. Instead, it must be that Baal wanted two oxen — or maybe a virgin maiden or the head of Alfredo Garcia, whatever. If you keep offering sacrifices, it will eventually rain, and when it does, “Praise Baal!”
.. The central fallacy here is the idea that conspiracy theories are reasoning toward anything at all. It is in fact a form of pseudo-reasoning: thinking backward from the proposition that a bad event must have been caused by dark forces, which (allegedly) benefit from it. Like the drunk who only looks for his car keys where the light is good, the truth-seeker only looks for evidence to support the proposition. The levees in New Orleans did not hold, Spike Lee observed, so it must be because George W. Bush had them bombed.
Of course, everything becomes so much more complicated by the fact that sometimes there are conspiracies. But they are rare, they are almost never vast, they usually fail, and when they succeed it is most often more from luck than will. Whenever you hear someone insist that “there are no coincidences,” they are revealing that they live in a world of magical realism where powerful unseen forces are treating us all like pawns. It’s a form of secular demonology.
I’ll be honest: I am far more annoyed by conservatives who traffic in conspiracy theories than liberals who do so. My reasons are twofold. As a practical matter, it bothers me because they make conservatives look bad, and I consider myself more invested in protecting my “side” from making an ass of itself. More generally, it bothers me because conservatives are supposed to understand, as a matter of philosophy, the limits of planning.
For instance, it’s one thing for liberals to claim simultaneously that George W. Bush was an idiot and that this idiot nonetheless managed to orchestrate a massive conspiracy to attack the United States on 9/11. It’s another for conservatives, presumably trained in the laws of unintended consequences, the limits of reason, and the fatal conceit of planning, to argue that the hijackers were just a bunch of patsies for an operation that would have involved hundreds or thousands of American agents — without a single whistleblower among them. This can best be visually represented by someone turning Occam’s Razor into a heavy spoon or soup ladle and beating Friedrich Hayek about the head and neck with it. But that’s what happened to people such as Morgan Reynolds and Paul Craig Roberts. Worse, these people have to believe their colleagues and ideological comrades — whom they knew and for whom they often worked — were in fact brilliant mass murderers.
.. I increasingly feel more like a spectator to American politics than I ever have before. It’s really quite liberating, if exhausting. Because I have zero personal loyalty to, or emotional investment, in Donald Trump, I feel no need to defend him from legitimate criticism, never mind bend my understanding of conservatism to his behavior and rhetoric.
.. Because humans are wired to believe that their leaders are worthy of being the leader, they bend their views to extol the character traits and priorities of the leader. Today, definitions of good character are being bent to fit Trump’s character, and the yardstick of what amounts to being presidential is being shaved down to a nub to match Trump’s conduct... Newt Gingrich is a great example of how everything must be bent to the president’s personal needs. The man who led the expansion of NATO and the passage of NAFTA long ago cast aside these essential parts of his legacy, like so much ballast, in order to stay afloat on the Trumpian tide. But on Thursday, he reached a new low. When asked about a possible Supreme Court fight to release Trump’s tax returns, Gingrich said, “We’ll see whether or not the Kavanaugh fight was worth it.”.. I’m sorry, the 40-plus-year fight to get constitutionalists on the Court wasn’t about protecting Donald Trump from embarrassment or criminal jeopardy. The reason why the Kavanaugh fight united nearly the entire conservative and Republican coalition wasn’t about circling the wagons around Trump. Indeed, the only reason the Right unified around Kavanaugh was that it wasn’t about Trump. If Trump had picked Jeanine Pirro, you would not have seen the Federalist Society, The Weekly Standard, Commentary, National Review, et al. rush to support her... During the confirmation fight, before the sexual-McCarthyism phase, conservatives — including, most emphatically, Kavanaugh himself — insisted that the charge that Kavanaugh would be a Trump crony on the bench was everything from wrong to an outrageous slander. Newt himself described the stakes very differently. When the fight was on, it was all about decency and patriotism.Now that the fight is over, Newt is saying “never mind.” None of it would be “worth it” if Kavanaugh doesn’t protect the president’s tax returns — which candidate Trump said he would release! It profits a man nothing to lose his soul for all the world, but for Trump’s tax returns?
.. Transactional Shmansactional
This is the fatal flaw with the “transactional” defense of Trump. Very few people seem capable of sticking to it. The transactional argument holds that one can be critical of the man while celebrating what he is accomplishing (or what is being accomplished on his watch by Cocaine Mitch and others). In private, most of the conservatives I talk to around the country offer some version of this defense. And I find it utterly defensible, as far as it goes. Indeed, my own position of praising the good and condemning the bad is a version of the transactional defense, even if I was a critic of making the transaction in the first place.
.. Indeed, the president’s job description is being retroactively rewritten as Media Troll in Chief.
The president has long sold himself as a self-made billionaire, but a Times investigation found that he received at least $413 million in today’s dollars from his father’s real estate empire, much of it through tax dodges in the 1990s.
.. Fred and Mary Trump, transferred well over $1 billion in wealth to their children, which could have produced a tax bill of at least $550 million under the 55 percent tax rate then imposed on gifts and inheritances.
The Trumps paid a total of $52.2 million, or about 5 percent, tax records show.
.. The Times’s findings raise new questions about Mr. Trump’s refusal to release his income tax returns, breaking with decades of practice by past presidents. According to tax experts, it is unlikely that Mr. Trump would be vulnerable to criminal prosecution for helping his parents evade taxes, because the acts happened too long ago and are past the statute of limitations. There is no time limit, however, on civil fines for tax fraud.
.. Most notably, the documents include more than 200 tax returns from Fred Trump, his companies and various Trump partnerships and trusts.
.. What emerges from this body of evidence is a financial biography of the 45th president fundamentally at odds with the story Mr. Trump has sold in his books, his TV shows and his political life. In Mr. Trump’s version of how he got rich, he was the master dealmaker who broke free of his father’s “tiny” outer-borough operation and parlayed a single $1 million loan from his father (“I had to pay him back with interest!”) into a $10 billion empire
.. In Mr. Trump’s version, it was always his guts and gumption that overcame setbacks. Fred Trump was simply a cheerleader.
.. “I built what I built myself,” Mr. Trump has said, a narrative that was long amplified by often-credulous coverage from news organizations, including The Times.
.. They described how Mr. Trump piggybacked off his father’s banking connections to gain a foothold in Manhattan real estate. They poked holes in his go-to talking point about the $1 million loan, citing evidence that he actually got $14 million. They told how Fred Trump once helped his son make a bond payment on an Atlantic City casino by buying $3.5 million in casino chips.
.. The reporting makes clear that in every era of Mr. Trump’s life, his finances were deeply intertwined with, and dependent on, his father’s wealth.
.. 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.
.. In one six-year span, from 1988 through 1993, Fred Trump reported $109.7 million in total income, now equivalent to $210.7 million. It was not unusual for tens of millions in Treasury bills and certificates of deposit to flow through his personal bank accounts each month.
.. Fred Trump was relentless and creative in finding ways to channel this wealth to his children. He made Donald not just his salaried employee but also his property manager, landlord, banker and consultant. He gave him loan after loan, many never repaid. He provided money for his car, money for his employees, money to buy stocks, money for his first Manhattan offices and money to renovate those offices. He gave him three trust funds. He gave him shares in multiple partnerships. He gave him $10,000 Christmas checks. He gave him laundry revenue from his buildings.
.. Much of his 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.
.. 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 theme I see here through all of this is valuations: They play around with valuations in extreme ways,” said Lee-Ford Tritt, a University of Florida law professor and a leading expert in gift and estate tax law. “There are dramatic fluctuations depending on their purpose.”
.. The Trumps dodged hundreds of millions in gift taxes by submitting tax returns that grossly undervalued the properties, claiming they were worth just $41.4 million.
The same set of buildings would be sold off over the next decade for more than 16 times that amount.
.. All told, The Times documented 295 streams of revenue that Fred Trump created over five decades to enrich his son.
.. as Donald Trump careened from one financial disaster to the next, his father found ways to give him substantially more money, records show. Even so, in 1990, according to previously secret depositions, Mr. Trump tried to have his father’s will rewritten in a way that Fred Trump, alarmed and angered, feared could result in his empire’s being used to bail out his son’s failing businesses.
Of course, the story of how Donald Trump got rich cannot be reduced to handouts from his father. Before he became president, his singular achievement was building the brand of Donald J. Trump, Self-Made Billionaire, a brand so potent it generated hundreds of millions of dollars in revenue through TV shows, books and licensing deals.
Constructing that image required more than Fred Trump’s money. Just as important were his son’s preternatural marketing skills and always-be-closing competitive hustle. While Fred Trump helped finance the accouterments of wealth, Donald Trump, master self-promoter, spun them into a seductive narrative. Fred Trump’s money, for example, helped build Trump Tower, the talisman of privilege that established his son as a major player in New York. But Donald Trump recognized and exploited the iconic power of Trump Tower as a primary stage for both “The Apprentice” and his presidential campaign.
.. on May 4, 2004, when Mr. Trump and his siblings sold off the empire their father had spent 70 years assembling with the dream that it would never leave his family.
Donald Trump’s cut: $177.3 million, or $236.2 million in today’s dollars.
They were both fluent in the language of half-truths and lies, interviews and records show. They both delighted in transgressing without getting caught. They were both wizards at manipulating the value of their assets, making them appear worth a lot or a little depending on their needs.
.. Emblematic of their audacity was Park Briar, a 150-unit building in Queens. As it happened, 18 days before Fred Trump Jr.’s death, the Trump siblings had submitted Park Briar’s co-op conversion plan, stating under oath that the building was worth $17.1 million. Yet as Fred Trump Jr.’s executors, Donald Trump and his fatherwhen Fred Trump Jr. died.
.. This fantastical claim — that Park Briar should be taxed as if its value had fallen 83 percent in 18 days — slid past the I.R.S. with barely a protest. An auditor insisted the value should be increased by $100,000, to $3 million.
.. During the 1980s, Donald Trump became notorious for leaking word that he was taking positions in stocks, hinting of a possible takeover, and then either selling on the run-up or trying to extract lucrative concessions from the target company to make him go away. It was a form of stock manipulation with an unsavory label: “greenmailing.” The Times unearthed evidence that Mr. Trump enlisted his father as his greenmailing wingman.
On Jan. 26, 1989, Fred Trump bought 8,600 shares of Time Inc. for $934,854, his tax returns show. Seven days later, Dan Dorfman, a financial columnist known to be chatty with Donald Trump, broke the news that the younger Trump had “taken a sizable stake” in Time. Sure enough, Time’s shares jumped, allowing Fred Trump to make a $41,614 profit in two weeks.
.. Later that year, Fred Trump bought $5 million worth of American Airlines stock. Based on the share price — $81.74 — it appears he made the purchase shortly before Mr. Dorfman reported that Donald Trump was taking a stake in the company. Within weeks, the stock was over $100 a share.
.. Fred Trump could be cantankerous and cruel, according to sworn testimony by his relatives. “This is the stupidest thing I ever heard of,” he’d snap when someone disappointed him. He was different with his son Donald. He might chide him — “Finish this job before you start that job,” he’d counsel — but more often, he looked for ways to forgive and accommodate.
.. By 1987, for example, Donald Trump’s loan debt to his father had grown to at least $11 million. Yet canceling the debt would have required Donald Trump to pay millions in taxes on the amount forgiven. Father and son found another solution, one never before disclosed, that appears to constitute both an unreported multimillion-dollar gift and a potentially illegal tax write-off.
.. Most, if not all, of his investment, which totaled $15.5 million, was made by exchanging his son’s unpaid debts for Trump Palace shares, records show.
.. Under I.R.S. rules, selling shares worth $15.5 million to your son for $10,000 is tantamount to giving him a $15.49 million taxable gift. Fred Trump reported no such gift.
.. Fred Trump evaded the 55 percent tax on gifts, saving about $8 million. At the same time, he declared to the I.R.S. that Trump Palace was almost a complete loss — that he had walked away from a $15.5 million investment with just $10,000 to show for it.
Federal tax law prohibits deducting any loss from the sale of property between members of the same family, because of the potential for abuse. Yet Fred Trump appears to have done exactly that, dodging roughly $5 million more in income taxes.
.. At its heart lay a more ambitious project, executed to perfection over decades — to create that origin story, the myth of Donald J. Trump, Self-Made Billionaire.
.. Donald Trump built the foundation for the myth in the 1970s by appropriating his father’s empire as his own.
.. Through it all, Fred Trump played along. Never once did he publicly question his son’s claim about the $1 million loan.
.. Fred Trump believed that the document potentially put his life’s work at risk.
.. did many things. It protected Donald Trump’s portion of the inheritance from his creditors and from his impending divorce settlement with his first wife, Ivana Trump. It strengthened provisions in the existing will making him the sole executor of his father’s estate. But more than any of the particulars, it was the entirety of the codicil and its presentation as a fait accompli that alarmed Fred Trump
.. He confided to family members that he viewed the codicil as an attempt to go behind his back and give his son total control over his affairs. He said he feared that it could let Donald Trump denude his empire, even using it as collateral to rescue his failing businesses. (It was, in fact, the very month of the $3.5 million casino rescue.)
.. The lawyers quickly drafted a new codicil stripping Donald Trump of sole control over his father’s estate. Fred Trump signed it immediately.
.. Yet for all the financial support he had lavished on his children, for all his abhorrence of taxes, Fred Trump had stubbornly resisted his advisers’ recommendations to transfer ownership of his empire to the children to minimize estate taxes.
.. With every passing year, the actuarial odds increased that Fred Trump would die owning apartment buildings worth many hundreds of millions of dollars, all of it exposed to the 55 percent estate tax. Just as exposed was the mountain of cash he was sitting on.
.. Even after he paid himself $109.7 million from 1988 through 1993, his companies were holding $50 million in cash and investments
‘A DISGUISED GIFT’
A family company let Fred Trump funnel money to his children by effectively overcharging himself for repairs and improvements on his properties.
.. All County’s main purpose, The Times found, was to enable Fred Trump to make large cash gifts to his children and disguise them as legitimate business transactions, thus evading the 55 percent tax.
.. All County’s invoices were padded, marked up by 20 percent, or 50 percent, or even more, records show.
.. Years later, in his deposition during the dispute over Fred Trump’s estate, Robert Trump would say that All County actually saved Fred Trump money by negotiating better deals. Given Fred Trump’s long experience expertly squeezing better prices out of contractors, it was a surprising claim. It was also not true.
.. In 1991 and 1992, Fred Trump bought 78 refrigerator-stove combinations for Beach Haven from Long Island Appliance Wholesalers. The average price was $642.69. But in 1993, when he began paying All County for refrigerator-stove combinations, the price jumped by 46 percent.
.. Likewise, the price he paid for trash-compacting services at Beach Haven increased 64 percent. Janitorial supplies went up more than 100 percent. Plumbing repairs and supplies rose 122 percent.
.. While All County was all upside for Donald Trump and his siblings, it had an insidious downside for Fred Trump’s tenants.
.. One way to justify a rent increase was to make a major capital improvement. It did not take much to get approval; an invoice or canceled check would do if the expense seemed reasonable.
.. As Robert Trump acknowledged in his deposition, “The higher the markup would be, the higher the rent that might be charged.”
.. the Trumps got approval to raise rents on thousands of apartments by claiming more than $30 million in major capital improvements.
.. By 1998, records show, All County and Apartment Management were generating today’s equivalent of $2.2 million a year
.. According to Fred Trump’s 1995 gift tax return, obtained by The Times, the Trumps claimed that properties including 25 apartment complexes with 6,988 apartments — and twice the floor space of the Empire State Building —
.. The Trumps used Robert Von Ancken, a favorite of New York City’s big real estate families. Over a 45-year career, Mr. Von Ancken has appraised many of the city’s landmarks
.. buildings in the same neighborhood as Trump buildings sold for two to four times as much per square foot as Mr. Von Ancken’s appraisals
.. Of all Fred Trump’s properties, Patio Gardens was one of the least profitable, which may be why he decided to use it as a tax deduction. In 1992, he donated Patio Gardens to the National Kidney Foundation of New York/New Jersey, one of the largest charitable donations he ever made. The greater the value of Patio Gardens, the bigger his deduction. The appraisal cited in Fred Trump’s 1992 tax return valued Patio Gardens at $34 million, or $61.90 a square foot.
By contrast, Mr. Von Ancken’s GRAT appraisals found that the crown jewels of Fred Trump’s empire, Beach Haven and Shore Haven, with five times as many apartments as Patio Gardens, were together worth just $23 million, or $11.01 per square foot.
.. Mr. Von Ancken claimed that they were worth less than nothing — negative $5.9 million, to be exact.
.. a bank would value at $106.6 million in 2004.
..The I.R.S. has long accepted the idea that ownership with control is more valuable than ownership without control. Someone with a controlling interest in a building can decide if and when the building is sold, how it is marketed and what price to accept
.. the Trumps set out to create the fiction that Fred Trump was a minority owner. All it took was splitting the ownership structure of his empire. Fred and Mary Trump each ended up with 49.8 percent of the corporate entities that owned his buildings. The other 0.4 percent was split among their four children.
.. That enabled the Trumps to slash Mr. Von Ancken’s valuation in a way that was legally dubious. They claimed that Fred and Mary Trump’s status as minority owners, plus the fact that a building couldn’t be sold as easily as a share of stock, entitled them to lop 45 percent off Mr. Von Ancken’s $93.9 million valuation. This claim, combined with $18.3 million more in standard deductions, completed the alchemy of turning real estate that would soon be valued at nearly $900 million into $41.4 million.
.. The I.R.S. determined that the Trumps’ assets were worth $57.1 million, 38 percent more than the couple had claimed. From the perspective of an I.R.S. auditor, pulling in nearly $5 million in additional revenue could be considered a good day’s work. For the Trumps, getting the I.R.S. to agree that Fred Trump’s properties were worth only $57.1 million was a triumph.
.. The next year, 1998, Donald Trump’s share amounted to today’s equivalent of $9.6 million, The Times found.
This sudden influx of wealth came only weeks after he had published “The Art of the Comeback.”
.. “I learned a lot about myself during these hard times,” he wrote. “I learned about handling pressure. I was able to home in, buckle down, get back to the basics, and make things work. I worked much harder, I focused, and I got myself out of a box.”
Over 244 pages he did not mention that he was being handed nearly 25 percent of his father’s empire.
.. The man who paid himself $50 million in 1990 died with just $1.9 million in the bank.
.. According to his estate tax return, his most valuable asset was a $10.3 million I.O.U. from Donald Trump, money his son appears to have borrowed the year before Fred Trump died.
..In 2003, the Trump siblings gathered at Trump Tower for one of their periodic updates on their inherited empire.
.. Donald Trump insisted that the real estate market had peaked and that the time was right
.. He was also, once again, in financial trouble. His Atlantic City casinos were veering toward another bankruptcy. His creditors would soon threaten to oust him unless he committed to invest $55 million of his own money.
.. Schron paid $705.6 million for most of the empire, which included paying off the Trumps’ mortgages.
.. Within a year of the sale, Mr. Trump spent $149 million in cash on a rapid series of transactions that bolstered his billionaire bona fides. In June 2004 he agreed to pay $73 million to buy out his partner in the planned Trump International Hotel & Tower in Chicago.
.. The first season of “The Apprentice” was broadcast in 2004, just as Donald Trump was wrapping up the sale of his father’s empire.
.. Had Mr. Trump done nothing but invest the money his father gave him in an index fund that tracks the Standard & Poor’s 500, he would be worth $1.96 billion today.