Republicans Rigged the System to Enable Crimes Like Trump’s Tax Evasion
If Democrats know what they're doing, this will be a campaign issue.
Donald Trump at his Taj Mahal casino in 1989. Photo by Leif Skoogfors/CORBIS/Corbis via Getty
Donald Trump's penchant for telling cruel or unusual lies has been taken as a given for many, many months now. He spouts falsehoods about polls, about voting, about the economy, about himself, and about the women who have accused him of crimes. But the blockbuster New York Times story Tuesday showing how Trump's family used a variety of legal, semi-legal, and probably outright criminal methods to dodge taxes gave the public valuable insight into a very specific kind of lie Trump and rich people all over have in common. Fred Trump, the president's father, used a host of methods to transfer money to his children without paying any taxes. That included falsifying the amounts paid to vendors, getting appraisals that undervalued his properties, and buying a $15.5 million stake in one of his son's properties before selling that stake for $10,000 a few years later.
The Times story, which is long but worth reading in full to get a sense of how brazen these schemes were, proves definitively that Trump is more of a spoiled rich kid than a genius businessman—a phony who lied about how much money he had while getting bailed out over and over again by his father, a genuine empire-builder. (The Times reports that in 1990, Trump also tried to get his 85-year-old father to sign over more control of that empire to him.) But though this sort of behavior is outrageous, it's been enabled at every turn by a system that caters to the wealthy. That system, not Trump's individual malfeasance, is what Democrats should focus on as they work to retake Congress this year and the White House in 2020.
The Trump family's statement to the Times is revealing: "Our father’s estate was closed in 2001 by both the Internal Revenue Service and the New York State tax authorities, and our mother’s estate was closed in 2004." As the newspaper notes, the efforts by the family to take tax deductions they shouldn't have and undervalue their properties were "met with little resistance from the Internal Revenue Service." The Times calculated that Fred Trump's estate could have produced a $550 million tax bill, but instead the family paid just $52.2 million. So where was the IRS?
Wherever it was in the 90s, it's even more MIA right now—Republicans have spent years stripping away resources from the agency charged with collecting Americans' taxes. Congress has cut the IRS budget by 18 percent in inflation-adjusted terms since 2010, limiting its ability to investigate and punish tax evaders like the Trumps. (The Trumps' actions occurred before these cuts.) A recent ProPublica/ New York Times investigation found that last year the IRS brought in only 795 cases focused on tax fraud, a massive drop since 2010; collectively, US businesses evade an estimated $125 billion worth of taxes each year. Conservatives like Ted Cruz have periodically called for abolishing the IRS for obvious political reasons—no one likes paying taxes or dealing with the IRS—but the upshot of this rage is that the government has fewer tools with which to actually go after rich people who cheat and lie.
Since passing a complicated tax cut bill that will put more stress on collection operations, Republicans have begun to begrudgingly acknowledge the need for more IRS funding. But the issue has been largely reduced to background noise in a news environment full of loud noises.
Still, the Times story should give Democrats a way to bring the issue of tax enforcement in from the cold—and weaponize it. It demonstrates in exhaustive detail the way the rich aren't taxed like you or me. The Times touched on grantor-retained annuity trusts (GRATs), "one of the tax code’s great gifts to the ultrawealthy," which "let dynastic families like the Trumps pass wealth from one generation to the next—be it stocks, real estate, even art collections—without paying a dime of estate taxes." The man who appraised Trump properties as having strikingly low value—reducing the family's tax burden—was "a favorite of New York City’s big real estate families."
Zooming out from the Trumps, what we can see is a system in which the rich have the resources to use a variety of methods to evade taxes, but the government lacks the muscle to adequately counter those techniques. This isn't news, per se: Americans learned as much after the Panama and Paradise papers leaks, if they didn't know already. But by depriving the IRS of resources, Republicans have been enabling this immoral and sometimes criminal behavior to grow more brazen—by starving the beast of government, they've allowed the country's oligarchs to grow even fatter.
Americans hate this status quo. Multiple polls have shown that more than 60 percent of the population favors higher taxes on the wealthy, and last year's Republican-penned tax cut bill was decidedly unpopular. "Tax the rich" should be a no-brainer of a Democratic campaign slogan, especially with the party considering expensive social safety-net expansions like Medicare for all. There is some evidence that Democrats know this—that moving in a more explicitly anti–1 percent direction is their best hope. Just watch this recent ad from the Democratic Congressional Campaign Committee:
But hiking taxes on the wealthy should just be one of a bouquet of proposed Democratic policies that raise government revenue while punishing white-collar criminals. Democrats should emphasize plans to re-empower the Consumer Finance Protection Bureau, the agency charged with investigating financial firms that prey upon the poor that has been defanged by the Trump administration. They should also call for funding to allow the IRS to investigate companies and rich individuals who, like the Trumps, flout the country's tax laws in the name of hoarding wealth. Especially egregious tax cheats should be named and shamed—Bernie Sanders's recent callout of Amazon shows the kind of power public denouncements can have.
Importantly, to break through a crowded news environment, this needs to be an emotional appeal—not one based on dry statistics. That's why stories like the Times piece are vital: They show the extent of the obfuscations and outright lies that the rich partake in every day. The system is unfair because it is immoral. The GOP passed complicated tax-cut legislation that benefits the wealthy while working to take health insurance away from the poor and sick because fundamentally, the Republicans only care about their donors and themselves. The economy is good and the stock market is sky-high, but the benefits are accruing to the upper classes at the expense of everyone else. Trump is a cheater and a liar who heads a party whose mission it is to enable cheaters and liars. To fix America, we need to put scum like that in their place, whether that means out of elected office or, if their conduct warrants it, in a prison cell.
This is of course class warfare—or, more accurately, a response to the class warfare currently being waged by the rich against the poor. That means it will likely make some Democratic donors a bit uncomfortable. Republicans, after all, do not have a monopoly on tax evasion. But the country's 1 percent should be made uncomfortable—above all, the Times story shows just how comfortable they've gotten.