The most interesting part of the New York Times report on Trump’s wealth wasn’t that his daddy set him up for success, but the way in which the family’s wealth was preserved. The Trump family is not alone in creatively evading taxes and funneling wealth to the next generation—but they have been uniquely aggressive.
The exposé reveals dozens of ways in which Fred Trump’s wealth was passed to Donald Trump and his siblings, intentionally designed to avoid estate and gift taxes. Previous research, from journalists including David Cay Johnston, has revealed that Trump benefited from loans and financial connections to his father’s real-estate empire. The Times estimates that Trump received at least a whopping $413 million, in today’s dollars, from his father’s real-estate business. Any boast of having had the business acumen to become a “self-made man,” then, is self-deception, or amnesia.
Trump has bragged that his ability to reduce his taxes shows that he is “smart.” But it isn’t the result so much of intelligence as of the millions of dollars he had at his disposal to hire armies of lawyers, tax accountants, and financial planners to frack every possible tax loophole and skirt the law. Indeed, Trump’s lawyer and spokesperson, Charles Harder, said in a statement that “the affairs were handled by other Trump family members who were not experts themselves and therefore relied entirely upon the aforementioned licensed professions to ensure full compliance with the law.”
These techniques ranged from rigged appraisals and tax planning that manipulated the valuations of properties to the use of elaborate tax dodges, known as Granter Retained Annuity Trusts, or GRATs.
Fred Trump had a special eye out for his heir apparent, Donald. He provided an extraordinary financial safety net for Donald Trump’s entrepreneurial failures. This included making dozens of loans to the now-president that were never paid back.
To mask millions in gifts disguised as loans, Fred Trump would buy stakes in his son’s real-state projects and then sell out for considerably less, taking a loss. In 1987, he invested $15.5 million in Donald’s Trump Palace condominium project. In 1991, he sold his stake back to his son for $10,000. This effectively avoided paying gift taxes on $15.49 million.
In 1990, Donald Trump was on the verge of defaulting on a bond payment for the Trump Castle casino. Fred Trump dispatched an employee to purchase $3.4 million in casino chips, an illegal loan under New Jersey gaming laws.
A major project that the Trump family undertook, with Donald Trump playing a leading role, was to drain hundreds of millions in cash and assets from Fred Trump’s enormously profitable real-estate business and transfer it to his heirs while avoiding income, estate, and gift taxes.