Tag Archives: taxes

So THIS Is Why Trump Is Hiding His Tax Returns…

Among the many mysteries I’ve been unable to fathom is a deceptively simple one:  why don’t Trump voters find his hysterical efforts to hide his taxes suspicious? Don’t they ever wonder what it is he is so determined to hide?

So far, of course, he’s been successful. His lawyers have been able to appeal lower court orders requiring him to turn over his tax returns, his bank says it doesn’t have copies (and if you believe that, I have some swampland in Florida to sell you…), and between the insane tweets and the bizarre behaviors and now the impeachment shenanigans, the issue of the tax returns has receded into the vast pile of venality labeled “and other stuff.”

But thanks to Pro Publica, we now have at least a partial answer. It’s not surprising, but it sure does explain why he wanted to keep the information hidden.

Documents obtained by ProPublica show stark differences in how Donald Trump’s businesses reported some expenses, profits and occupancy figures for two Manhattan buildings, giving a lender different figures than they provided to New York City tax authorities. The discrepancies made the buildings appear more profitable to the lender — and less profitable to the officials who set the buildings’ property tax.

For instance, Trump told the lender that he took in twice as much rent from one building as he reported to tax authorities during the same year, 2017. He also gave conflicting occupancy figures for one of his signature skyscrapers, located at 40 Wall Street.

Lenders like to see a rising occupancy level as a sign of what they call “leasing momentum.” Sure enough, the company told a lender that 40 Wall Street had been 58.9% leased on Dec. 31, 2012, and then rose to 95% a few years later. The company told tax officials the building was 81% rented as of Jan. 5, 2013.

When tax experts were shown the discrepancies, they dismissed the possibility that they were careless errors; they agreed the inconsistencies were properly characterized as tax fraud.

New York City’s property tax forms state that the person signing them “affirms the truth of the statements made” and that “false filings are subject to all applicable civil and criminal penalties.”…

ProPublica obtained the property tax documents using New York’s Freedom of Information Law. The documents were public because Trump appealed his property tax bill for the buildings every year for nine years in a row, the extent of the available records. We compared the tax records with loan records that became public when Trump’s lender, Ladder Capital, sold the debt on his properties as part of mortgage-backed securities.

ProPublica reviewed records for four properties: 40 Wall Street, the Trump International Hotel and Tower, 1290 Avenue of the Americas and Trump Tower. Discrepancies involving two of them — 40 Wall Street and the Trump International Hotel and Tower — stood out.

One expert who was asked to look at the returns said the numbers suggested the company had kept two sets of books–one for lenders, another for tax authorities.

Taxes have long been a third rail for Trump. Long before he famously declined to make his personal returns public, a New York Times investigation concluded, Trump participated in tax schemes that involved “outright fraud,” and that he had formulated “a strategy to undervalue his parents’ real estate holdings by hundreds of millions of dollars on tax returns.” Trump’s former partners in Panama claimed in a lawsuit, which is ongoing, that Trump’s hotel management company failed to pay taxes on millions in fees it received. Spokespeople for Trump and his company have denied any tax improprieties in the past.

In February, Cohen told Congress that Trump had adjusted figures up or down, as necessary, to obtain loans and avoid taxes. “It was my experience that Mr. Trump inflated his total assets when it served his purposes,” Cohen testified, “and deflated his assets to reduce his real estate taxes.”

Most Trump voters, of course, lack the resources to play these games. They have to pay what they owe. One would think they might resent it when rich people lie to evade taxes–but then, it’s widely known that Trump routinely stiffs vendors and contractors, and his base doesn’t seem to care. (As long as he hates the same people they do…)

What was that Trump line? “When you’re a star, they let you do it.” A star! I guess the delusional self-image that supposedly entitles him to grab women’s genitals tells him he’s also entitled to cheat on his taxes.

Evidently, the people who think gold toilets are classy think tax fraud is smart…..

 

Rich Guys For Higher Taxes, Businesses For Single-Payer

Are more zillionaires joining “renegade” rich guys like Nick Hanauer and Warren Buffett and recognizing the dangers posed by the current gap between the rich and the rest?

A recent article from the Guardian was titled “Patriotic millionaires want to pay more taxes.” Those millionaires didn’t mince words.

If you believe the prevailing philosophy of US conservative ideology, the handful of individuals in the 1% are entitled to every bit of their wealth and power because they deployed their capital wisely.

As businessmen in the 1%, living in a conservative state, we confront this philosophy every day, and frankly, we’re sick of it.

The Republican party’s embrace of the “I’ve-done-it-all-on-my-own” mentality is extraordinarily delusional, harmful, and counterproductive. Collective goods – like a sound infrastructure system, a strong K-12 and higher education systems, and rule of law – are critical ingredients to building both individual and societal economic prosperity.

The article’s authors have joined the Patriotic Millionaires, a group of wealthy Americans “from all walks of life across deep red, deep blue and purple states” who realize that the system that enabled their success, that created opportunity, is fundamentally broken. And they aren’t shy about placing the blame: they write that the system has been ” hijacked by the ultra-wealthy.”

But a substantive and sincere commitment to an evolved form of capitalism requires a few things. It requires us to confront the reality of the climate crisis as the existential threat of our time; and to acknowledge that we are a country founded on the toxic prejudice of white supremacy, which continues to unjustly shape the future of millions of Americans before they’re even born. We must separate money from politics, so that the influence of special interests doesn’t overpower the voices of voters; and shift our financial goals from short-term profits to long-term sustainability.

And it requires economically advantaged folks like us to not only pay our fair share, but also unequivocally commit to and support the policies that will achieve that reality – and to get all of our similarly situated friends and associates to do the same.

It isn’t just the ultra-rich who are (belatedly) recognizing the need for change. Another new group is Businesses for Single Payer.

Activist Wendell Potter has become president of Business for Medicare for All, the only national business organization working for single payer health insurance. This group of the economically pragmatic lends expertise and credibility to the cause of reform at a time when many, including some of those running for the Democratic presidential nomination, question the viability of single payer.

Potter spent twenty years in the health insurance industry, and left to become an outspoken critic of what he calls a broken, dysfunctional and unfair healthcare system. He points to surveys showing that people on Medicare are far more satisfied than people with private insurance, and says one reason is that  private insurance has changed significantly over the years. Premiums have gone up while insurance companies have devised clever strategies to avoid paying for care.

In the linked article, Potter enumerates the reasons single-payer systems are superior to our patchwork approach. Most of us could recite those reasons in our sleep, but until now, the business sector has been noticeably absent from both the conversation and the criticism. Why the change?

About three years ago, I was approached by a business leader in the Lehigh Valley of Pennsylvania, Richard Master, who decided to make a documentary on the US healthcare system….

But he began to pay a lot of attention to healthcare costs. He’s got an MBA from Wharton and a law degree from Columbia so this guy’s really smart, has built a very successful business, but he was questioning the sanity of a system in which he has no control over his healthcare costs from year to year….

 I knew what individuals and families were facing, but I hadn’t paid a lot of attention to what is happening to employers who are trying to stay in the game in our uniquely American, employer-based healthcare system. It’s abundantly clear that the system has run its course and is just not working for increasingly large numbers of employers.

Potter quotes Warren Buffett’s observation that “healthcare is the tapeworm that is destroying American competitiveness,” and goes on to say that more and more businesses are recognizing the need to change.

We’ve got several hundred employers who are part of our organization. Our goal is to have at least one business from every congressional district by this time next year. We’re growing pretty rapidly and we already have a voice in Washington.

Money talks, for good or ill. If people with money support higher tax rates and a more robust social safety net, Congress might actually listen.

 

About Those Rankings…

A reader recently sent me a link to a ranking of U.S. states on the basis of how “business-friendly” they are. The more welcoming to business, the more likely to create jobs and experience economic growth–or so the organization doing the ranking asserted.

The organization doing this particular ranking was ALEC, the American Legislative Exchange Council. ALEC is dominated by corporate and libertarian interests, so it isn’t surprising that its definition of “business friendly” is heavily weighted toward low tax rates and corporate subsidies.

If you agree with ALEC’s priorities, I suppose having one’s state receive high marks is cause for celebration. If you don’t–and I don’t–their conclusions are pretty worthless, except, perhaps, as a cautionary tale.

City and state rankings are issued by a variety of organizations and publications; they’re the sorts of “report cards” that Mayors and Governors often brag about–conveniently overlooking the fact that virtually all of them paint a picture of how well their jurisdictions meet the sponsors’ priorities rather than providing accurate assessments of the comparative merits of the “rankees.”

I would call my critique of city and state rankings their “dirty little secret,” except it isn’t very secret: all of the various rankings–the ones I like and the ones I don’t– are inescapably a function of the values of the entity doing the ranking. (Take a look at those “best places to retire” lists. Their top choices tend to be places I’d hate, because the elements that make a community livable to me are clearly not among the criteria they’ve employed.)

ALEC  finds Indiana moderately “business friendly” because our taxes are low, and it prioritizes low taxes over elements of state environments that many businesses find more important: an educated workforce, and such quality of life measures as good schools, convenient public transportation, affordable housing and well-maintained infrastructure. The presence of those elements, of course, depends upon the adequacy of the public dollars available to support them–and we raise those public dollars through taxation.

You see the problem.

It isn’t a mystery why states like Indiana lack the first-rate public schools needed to produce that coveted educated workforce, not to mention the well-maintained public amenities that factor into a high quality of life. Like ALEC, we’ve prioritized low taxes over the maintenance of our social and physical environment.

There is a fairly substantial body of business research that finds the availability of an educated workforce and those “quality of life” measures that attract and keep talented workers much more important to businesses seeking to relocate than the level of taxation. Not that taxes aren’t an important part of the mix, but they are rarely dispositive.

If you want confirmation of that research, you need only take a look at the qualities that Amazon has listed as important as it searches for a city in which to locate its second headquarters. Or talk to the people in your city or state who are charged with economic development.

A genuinely business-friendly environment is one in which people want to live and work. Unfortunately, that isn’t something that can be produced on the cheap.

 

 

 

Old News–Again

The Evansville, Indiana Courier Press recently ran an “expose” about Indiana’s Township Trustees.

I put expose in quotes because the article repeated and confirmed practices that have been widely criticized since at least 1967, when a law review article disclosed that every dollar of poor relief that Trustees distributed cost Indiana taxpayers another dollar and a half in “overhead” costs.

The Courier Press fleshed out the picture:

What kind of job doesn’t have any competition to apply, lets a person keep their brother employed, gives their husband (who helps approve the budget) a mowing contract, gets paid to use their house as a seldom-used office and have part of their phone paid for? And, oh yeah, it’s all on the taxpayer’s dime?

The job is rural township trustee.

The paper’s investigation found that more than half of the 38 Township Trustees in Vanderburgh, Warrick, Posey and Gibson counties employ relatives, award contracts to relatives or have a Trustee’s relative on the advisory board that (theoretically) oversees the office.

Twenty-seven of 38 area township governments are based out of the trustee’s house. The average number of households those trustees helped in 2016 was 14, with a median of 6. More than half of the townships based in homes helped fewer than 10 households last year.

Four township offices didn’t provide any poor relief in 2016: Armstrong and Union townships in Vanderburgh County and Wabash and Washington townships in Gibson County.

They also can be reimbursed for Internet and telephone usage.

Taxpayers paid about $60,000 last year for rent paid to trustees working out of their homes in the four-county area.

Hundreds of the 1,005 townships in Indiana are managed in similar ways.

In fairness, Governor Daniels tried. When he convened the Kernan-Shepard Commission to study government reorganization, one of its recommendations was elimination/consolodation of Indiana’s 1008 townships. Townships are an artifact of the days when travel to the county seat (by horseback) took half a day. Township responsibilities have steadily shrunk, and today they do very little; a few manage fire departments and most administer (with documented inefficiency) poor relief.

Poll after poll confirmed that most Indiana voters agreed with the Commission. Abolishing townships should have been a no-brainer–except we still haven’t managed to do so.

The problem is that, although a large majority of voters agreed that townships should go–that they wasted money better used elsewhere–it was a rare individual for whom this was a burning issue. For the Township Trustees and members of their Advisory Boards, however, it was issue #1. Eliminating townships would eliminate the livliehoods of the Trustees (and the relatives so many of them employ). It would eliminate the inflated fees paid to Advisory Board members for attending three or four meetings a year. Those Trustees and Advisory Board members focused like lasers on lawmakers, marshalling their forces, bringing in people to testify, hiring lobbyists and calling in political favors.

And Indiana still has townships.

In Washington, this same scenario plays over and over. Most Americans disapprove of the special tax breaks that benefit Big Oil, to offer just one example, but how many of us have written or called our Senators or Representatives about it? Very few–it is just one issue among many for most of us. But it is issue #1 for Big Oil (and Big Pharma and Big Banking, etc.), and they have  actively worked to protect their subsidies. When those with lots of resources focus those resources on lawmakers, they tend to get what they want.

When ordinary citizens care enough about an issue to create and donate to grass-roots organizations, call their Representatives, enlist their neighbors and friends–they can prevail. But they have to care enough.

When it comes to Township government, they evidently don’t.

 

Reality Bites….

It’s really a shame that American policymakers are so allergic to evidence, because we have recently had a couple of natural experiments testing the GOP’s most fervent economic ideologies, and we could learn a lot from both of them.

Most people who follow the news are aware of Sam Brownback’s effort to make Kansas a shining example of economic growth to be achieved by drastic reductions in state taxes. To say it didn’t go well would be an understatement. Eventually–after brutal cuts to public education, infrastructure and public services and no sign of the promised offsetting economic growth–more rational Republicans in the state legislature forced him to accept tax increases.

Fewer people are aware of an even more dramatic experiment in Colorado.

The story began with the 2008 recession; like many other municipalities, Colorado Springs was experiencing fiscal distress.

To fill a $28 million budget hole, Colorado Springs’ political leaders—who until that point might have been described by most voters as fiscal conservatives—proposed tripling property taxes. Nearly two-thirds of voters said no. In response, city officials (some would say almost petulantly) turned off one out of every three street lights. That’s when people started paying attention to a city that seemed to be conducting a real-time experiment in fiscal self-starvation. But that was just the prelude. The city wasn’t content simply to reject a tax increase. Voters wanted something genuinely different, so a little more than a year later, they elected a real estate entrepreneur as mayor who promised a radical break from politics as usual.

For a city, like the country at large, that was hurting economically, Steve Bach seemed like a man with an answer. What he promised sounded radically simple: Wasteful government is the root of the pain, and if you just run government like the best businesses, the pain will go away. Easy. Because he had never held office and because he actually had been a successful entrepreneur, people were inclined to believe he really could reinvent the way a city was governed.

Bach promised to transform city government, making it work for everyone without tax increases. (Sound familiar?) He promised to do away with the personal property tax for businesses and to reduce the time needed for developers to get permits. He promised that these and his other “businesslike” measures would promote job growth–he promised 6,000 new jobs a year. He sold himself as an outsider fighting the city’s “regulatory agency mind-set.”

“Sixty Minutes” and “This American Life” covered the election and the town’s new “business friendly” governance. We haven’t heard much from the media since then, and it turns out that a lot has changed. As Politico noted, “seven years after the experiment began, the verdict is in—and it’s not at all what its architects planned.”

It turned out that putting people who don’t understand government in charge of government isn’t a formula for success. The new mayor fired people who had institutional memory and governing expertise; deferred critical infrastructure maintenance, and quarreled with the City Council when its members had the nerve to act like a co-equal branch of government rather than as his subordinates. The promised job growth didn’t come. Chaos did.

The next election, Colorado Springs elected as mayor a man who  had spent his entire professional life in government.

It’s still a conservative town. Donald Trump beat Hillary Clinton by more than 22 points in Colorado Springs’ El Paso County. But even with that “small-government mind-set,”

[T]hree times in his first two years as mayor, Suthers has gone to voters either proposing a new tax or asking to keep extra tax revenue. By overwhelming margins, he has now persuaded the supposedly anti-tax zealots of Colorado Springs to commit $250 million to new roads, $2 million to new park trails and as much as $12 million for new stormwater projects.

What has all this “wasteful” government spending done to economic growth? Some 16,000 jobs have been created in the past 24 months, and unemployment is at 2.7%.

Amazing as it may seem, running a government requires different skills than running a business–and fiscal prudence is not a synonym for low or no taxes.

Who knew?