Tax revenues support public investments and therefore are the cornerstones of effective public structures and prosperous communities. In order for our tax structure to work it must be fair across income levels and tax enforcement must be applied consistently. Unfortunately that is not the case as it is clear that when it comes to taxes the richest use a different set of rules while the working class continues to lose.
A new investigation by the New York Times has found that “President Trump participated in dubious tax schemes during the 1990s, including instances of outright fraud, that greatly increased the fortune he received from his parents.”
Here are some of the key findings of this investigation:
- “President Trump 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”
- “The president’s parents, 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. However, the Trumps paid a total of $52.2 million, or about 5 percent, tax records show.”
- “In the late 1940s, Fred Trump obtained roughly $26 million in federal loans to build two of his largest developments. Records obtained by The Times reveal how he began to build or buy apartment buildings in Brooklyn and Queens and then gradually, without public trace, transfer ownership to his children through a web of partnerships and corporations.”
Findings like this must be called out and a statement by the Institute of Taxation and Economic Policy (ITEP) does exactly that by bluntly stating:
“The key takeaway from the New York Times article on Donald Trump’s family’s tax shenanigans is that the wealthy and powerful abide by a different set of rules than the rest of us. Not only does the tax system allow the wealthy to take advantage of legal loopholes, it also allows them to blur the line between legal avoidance and illegal tax evasion with little consequence.”
“Wealthy Americans should not be able to play by a different set of rules and avoid or evade their fair share of taxes. We need to reform the tax system to close the loopholes the wealthy use to avoid taxes and substantially increase funding to the IRS to ensure that the laws we do have are robustly enforced.”
Overall, these latest findings of how the richest are not paying their fair share and how the tax system consolidates their wealthy year after year are very concerning, especially considering that the federal tax law passed last year rigs the rules in favor of the rich even more. Indeed, President Trump pushed for a federal tax law last year that provides 50 percent of the benefits to the wealthiest 5 percent of Americans.
This law also provided a break that favors the wealthy as it doubled the amount of assets that can be left to heirs without triggering the estate tax from $11 million for a married couple to $22 million. Even prior to passage of the new law, only 0.2 percent of estates were taxed, which means reducing the estate tax only benefited the very wealthiest families even more. Furthermore, it is well established that recent tax code changes have provided major corporations with generous tax cuts.
As a country we must ensure everyone in America, regardless of their income level, has a good chance to succeed and thrive, because that is when our country is at its best. Having a different set of rules that simply helps the rich avoid accountability goes against that and sends the wrong message about what is right.
Luis A. Toledo is a Public Policy Analyst for the Budget & Tax Center, a project of the North Carolina Justice Center.