Our view: Trump inherited a fortune and managed it poorly
Among many of President Donald Trump’s most adoring fans, it is an article of faith that he was, before his election, a shrewd businessman. How could he not be? He played one on TV.
In fact, Trump’s business career was checkered at best. He borrowed money at the wrong times and at punitively high rates of interest, causing him to fail in the Atlantic City casino business even before the city fell on hard times. His survival might have involved creative tax avoidance. It certainly involved using a very forgiving bankruptcy code to walk out on his debts, profiting while others took serious hits.
Much of this has long been known. But Trump’s continuing refusal to release his tax returns, and his extreme skittishness about Justice Department probes into his pre-presidential finances, suggest that more unsavory things about his business shortcomings could eventually emerge.
Reinforcing this perception was Tuesday’s exhaustive report in The New York Times, which found that Trump and his siblings used sham companies to avoid virtually all taxes on more than $1 billion in inheritance from their wealthy father. Some of the tax avoidance schemes involved padded invoices, improper deductions and undervalued real estate holdings, according to the report.
The disclosure is deeply disturbing. It is also utterly predictable from a man who seems to be the living embodiment of the late Leona Hemsley’s credo, uttered to her housekeeper: “Only the little people pay taxes.”
The Times asserts that the sham companies involved “instances of outright fraud.” We leave that determination to the tax authorities. The president also has some serious explaining to do about his foundation, which the New York attorney general alleges has been used more for self-dealing than for selfless giving.
Perhaps the most eye-opening disclosure in The Times report is not its assertion of fraud but the sheer amount of Trump’s inheritance. According to The Times, his portion of the bounty, received from the 1940s to 2004, was at least $413 million in today’s dollars.
At the risk of stating the obvious: That is a lot of money. A lot of daddy’s money, to be specific.
It’s a far cry from the “small loan of a million dollars” that Trump claims launched him in business. And it further undermines the claim that Trump was some kind of business genius who could easily translate that acumen to running Washington.
For years, many of those who have poked around Trump’s business dealings have concluded that he might be equally wealthy had he simply invested his inheritance in mutual funds or a broad portfolio of stocks. With the caveat that investing in such an open fashion would have meant — the horror! — paying taxes, The Times report supports that argument.
It’s a sobering thought. This would mean that all of Trump’s schemes to profit at others’ expense — paying himself a fortune to run his casinos into the ground, transferring personal debts to his failing companies, using bankruptcy protection to force creditors to accept less, signing up customers for the defunct Trump University — have managed only to maintain his inheritance plus something close to market rates of return.
It’s a good thing for Trump that most of his business career was spent running a family business rather than a public company answerable to directors and shareholders. Because long ago he likely would have been told: “You’re fired.”