Tax scheme millions for Trump

The New York Times published an investigative report on Tuesday stating that US President Donald Trump took part in illegal tax schemes that let him inherit (in today's dollars) "$400 million from his father’s empire, much of it through dubious tax schemes during the 1990s, including instances of outright fraud."

The report contradicts the president's longstanding descriptions of himself as a self-made businessman who used a small loan from his father, Fred Trump, to build a billion-dollar real estate empire.

Read more: Report slams Trump for legal tax avoided since 1995

What the New York Times found: Key claims

• Starting in childhood, Donald Trump received at least $413 million (€360 million)from his father's real estate wealth, not the $1 million loan that the president has touted he got from his father as start-up capital.
• Trump and his siblings helped their father dodge taxes by engaging in questionable tax schemes. Methods detailed by the paper included setting up sham corporations, taking improper tax deductions and undervaluing real estate holdings to US tax authorities.
• Donald Trump's parents transferred over $1 billion to their children over the course of their lives — an amount that could have seen a tax bill of at least $550 million. Ultimately, only 5 percent, or $52.2 million, was paid in total tax on the amount by disguising the wealth gifts. 
• The investigation encompassed more than 100,000 pages of documents from Fred Trump's business empire, including tax returns, public sourced documents, confidential records and interviews with former employees and advisors.

Potential impact of the report

While The New York Times made it clear the investigation did not include Donald Trump's personal returns, the paper said the findings show how the president's wealth has always been "deeply intertwined with, and dependent on" on his father's wealth — a stark contrast to Donald Trump's self-promoted image as an independently successful businessman.

The report could spur further investigations by tax authorities into past Trump family tax practices. If substantiated, civil fines could be imposed for tax fraud, the paper said, citing tax experts.

Tax expert's take: DW asked Grayson McCouch, a legal expert in estate and gift taxation and a law professor at the University of Florida, to weigh in on the report:

• The report presents a "whole spectrum of questionable transactions, probably ranging from fairly crude techniques that are widely practiced and rarely noticed and prosecuted to potentially downright fraudulent ones."
• "Potentially fradulent would be the failure to report a transaction [like a gift from parent to child] or the intentional misevaluation of a transaction," such as low-balling property values for a sale.
• The legal expert finds it "hard to imagine as a practical matter that [Fred Trump's estate] case would ever be reopened given that the family got a closing letter from the IRS," the US tax authorities.
• With respect to impact, McCouch thinks that the report will "heighten interest into the Trump organization's business dealings and, if it's possible, increase the sense of partisan divide in perceptions over whether this business of avoiding taxes is what smart people do or at the fringes of proper and legal behavior."

Report contested

The White House described the report as a "misleading attack against the Trump family by the failing New York Times," also criticizing the paper and other media outlets for constantly "attacking" the president and his family. Administration spokesperson Sarah Sanders added that US tax authorities had "reviewed and signed off on these transactions."

"All appropriate gift and estate tax returns were filed, and the required taxes were paid," Donald Trump's brother Robert said in a statement included in the paper's report, adding that both national and state tax authorities closed his parents' estates.

"The New York Times’s allegations of fraud and tax evasion are 100 percent false, and highly defamatory," Donald Trump's lawyer, Charles Harder, wrote in a statement. "There was no fraud or tax evasion by anyone. The facts upon which The Times bases its false allegations are extremely inaccurate."

Why the focus on Trump's taxes

Trump has consistently claimed he built up his own real estate empire wth minimal financial help from his father, a real estate mogul. Trump not only used the description to promote his image as a skilled businessman but also to paint himself as a "self-made man" during his presidential candidacy. 

Additionally, unlike previous US presidents, Donald Trump has refused to release his personal tax returns. Previous media investigations found that Trump recorded a massive loss in 1995 to avoid paying taxes.

Many individuals close to Trump, including his former lawyer Michael Cohen and his former campaign manager Paul Manafort, have been convicted of tax fraud.

cmb/jm (AP, Reuters)

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