Wealth begets wealth, and the wealthy are remarkably adept at figuring out how to get wealthier. That is one takeaway from The New York Times’ mammoth investigation into the Trump family’s gymnastic accounting prowess, based on reams of tax returns and corporate documents. The family used perfectly legal and more questionable tax-avoidance strategies to bolster its net worth, the investigation by David Barstow, Susanne Craig, and Russ Buettner found, and also committed “outright fraud.”
As a result, hundreds of millions of dollars passed from one generation to another scarcely taxed or never taxed at all. President Donald Trump’s parents, aided by their son, transferred more than a billion dollars to their heirs, much of which should have been subject to a 55 percent tax on gifts and inheritances. The Trumps paid an estimated 5 percent rate, starving the government of hundreds of millions of dollars of tax revenue and hastening the dynastic accumulation of wealth. Indeed, President Trump, who often touts himself as a self-made man, received $413 million in today’s dollars from his family, with the infusions starting when he was a toddler.
The story acts as an accounting playbook for the hyper-rich. Among other tactics, the Trump family manipulated “grantor-retained annuity trusts,” or GRATs. The Trumps put assets into these special vehicles and took annuity payments from them, before passing the assets on to their children. By grossly undervaluing the real estate in the GRATs—properties valued at $41 million for tax purposes in 1995 were worth close to a billion dollars when valued by banks a decade later—the family dodged hundreds of millions of dollars in taxes, the Times investigation concludes.