The Ruthless Tactics Trump has Used to Avoid State and Local Taxes
by Bryce Covert –
He’s told tax officials one thing and the public another, all to save a buck.
In his defense, he has insisted that he pays other taxes, such as those owed to state and local governments. “Mr. Trump has paid hundreds of millions of dollars in property taxes, sales and excise taxes, real estate taxes, city taxes, state taxes, employee taxes and federal taxes, along with very substantial charitable contributions,” his campaign said in a statement in response to documents uncovered by the New York Times that showed he may have skirted federal taxes. They kept repeating this defense even as Trump refuses to release his tax returns.
But court and tax records obtained by a number of media outlets show that he has aggressively fought paying those other taxes, too. And avoiding obligations to state and local governments has an even more harmful impact, given that any loss in tax revenue for a state or local budget means either cutting services or raising that revenue from other people.
When CNN reviewed tax records for 26 properties that Trump owned fully or in part — including buildings, golf courses, and his own homes — it found that for all but one he fought their original assessed value aggressively in order to bring down what he would owe in property taxes. (On the last one, a golf course in Bedminster, New Jersey, he lowered his tax bill by getting a herd of goats to graze on the property, qualifying for a state farmland tax break.) For many of them, CNN found he was successful in reducing his taxes by hundreds of thousands of dollars a year.
The Huffington Post came to the same conclusion when it reviewed documents, finding that he has repeatedly sought to lower what he owes to state and local governments, even by claiming to tax authorities his properties were worth less than what he said they were worth on other legal documents.
These tactics aren’t unique to Trump: Real estate developers often seek to reduce the assessed value of their properties to reduce their tax bills. But Trump seems to have been particularly aggressive despite his public statements that he pays state and local taxes. The fights to lower his property valuations have also contradicted what he’s said in public filings.
Telling the tax man one thing, the voters another
A prime example is the manner in which he managed to re-value one of his hotels in Las Vegas, Nevada. In 2015, Trump protested an appraisal of his Trump International Hotel, which was originally $176 million. The appeal requested that it be valued at $20 million, even lower than the $25 million valuation reached by his company’s own appraiser.
The Clark County tax board agreed to lower it to just over $48 million, but that wasn’t good enough, so Trump’s company again appealed it. The state tax board eventually agreed to reduce its taxable value to $25 million.
But just six days after that decision, Trump told the Federal Election Commission in a personal financial disclosure form that it was worth more than $50 million. (Candidates are required to report values in brackets, with the highest category “over $50 million,” so he didn’t have to get more specific.) Valuing his various real estate assets higher leads to a higher personal net worth, a figure he has long been obsessed with inflating.
By wrestling the valuation down below even what his own financial disclosure form said, Trump could have saved $4.4 million annually in property taxes at the area’s standard property tax rate. He could still be reaping those kinds of rewards.
The state was still reeling from the aftereffects of the 2008 financial crisis and economic downturn: Nevada significantly raised taxes and cut services in the wake of the recession and the huge toll it took on the state.
Tactics that are par for the course
Trump has frequently used these tactics in his own state of New York. He is currently pushing to cut the property taxes owed on the Trump National Golf Club in Briarcliff Manor, New York by 90 percent, arguing that the valuation should be dropped from $15 million to $1.4 million. But in his financial disclosures, he said that the property was worth more than $50 million.
If he’s successful in convincing tax officials to lower the valuation of his golf course, the property taxes he’ll owe will drop from $471,000 to $47,000. The biggest savings will be in school taxes, which will drop from $287,000 to just $32,000 for local schools.
Those lost taxes would take a toll. As Dana Levenberg, town supervisor of neighboring Ossining, New York, told CNN, “That means a teacher. That means a garbage truck. That means parks can’t be fixed up and fields can’t be played on… We’re going to have to offset that somehow in the budget.”
In East Fishkill, New York, he fought to retroactively reduce the valuation of the Trump National Hudson Valley golf course from $6 million to $4.6 million, even though his disclosure form said it was worth between $5 million and $25 million. The town settled with him earlier this year and agreed to drop the value to the level Trump sought. The settlement went even further, though: the town was forced to determine whether Trump had paid too much in taxes and ended up refunding him $40,553.69 from three school districts, $1,066.06 from the fire department, and $306.00 from the public library.
He’s followed the same playbook with other golf courses. For eight of the ten courses on which he pays taxes, according to an analysis by the Washington Post, he reported they were worth more on FEC forms than the valuations he’s argued for with tax officials.
For example, he bought a golf club in Ranchos Palos Verdes, California for $27 million, put in more than $260 million to remodel it, and then told tax officials it should only be valued at $10 million. He’s now won three appeals and brought the appraisal down to about $14 million. His disclosure form put it at more than $50 million.
At the Trump National Golf Club Charlotte located in Iredell County, North Carolina, he’s successfully brought down the valuation from $22.7 million to just $9.6 million, costing the county $167,000 in annual revenue. Overall, he saved about $200,000 in taxes. But Trump bought it for $6 million in 2013, a time when it was valued at $24 million for tax purposes, and pledged to spend $10 million on renovations.
He did the same in Florida, where he argued that the Trump National Golf Club Jupiter should be valued no more than $5 million for tax purposes yet told the FEC it was worth more than $50 million.
Battling the Big Apple
He’s used other tactics to lower his tax bills in his home town of New York City. The New York Times found that he had accumulated $885 million in tax breaks, grants, and other city subsidies.
That includes a $360 million, 40-year tax break on his rehabilitation of the Grand Hyatt hotel in forgiven or uncollected taxes. It’s the longest abatement ever granted by the city. Yet the property itself cost him just $120 million to build. The tax break was granted in the mid-80s, a time when the city was dealing with its own budget crisis and an overall sluggish economy.
The head of the state Urban Development Corporation at the time, Richard Ravitch, had to approve the tax deal, and he says he told Trump that he didn’t think it should be exempt from taxes. In his telling in an interview with the Times, Trump responded, “If you don’t give me an exemption I’ll have you fired.”
Trump also pushed for a 421-a tax break for Trump Tower when it was being built, a break meant to stimulate the creation of housing in underutilized properties. But Trump’s project was replacing a functioning store. When his application was rejected on those grounds, he sued in 1981 and lost, then appealed and won in 1984. The city’s finance department has found that the total tax benefit that he reaped came to $22.5 million, plus he got another $15 million through a separate tax program for the same property.
He also litigated to secure a multi-million-dollar break for Trump World Tower, which he built in 2000 near the United Nations. After he was initially denied a 421-a tax break, given that it was being built on the site of a functioning office building, he sued and eventually won a settlement that gave him a 10-year tax exemption worth $119.5 million.
He was also given a 10-year tax abatement in which the city forgave $331.8 million in property taxes on the Trump Place-Riverside South apartment complex and a $15.9 million tax break on the Trump International Hotel and Tower at Columbus Circle.
The latest fight over tax valuations he’s embroiled himself in is in Washington, D.C. over his newly opened Trump International Hotel. He’s already arguing that the tax assessor who put the value at $98 million should drop it to $28 million. So far the assessor has agreed to lower it to $91 million, but Trump’s company filed a petition in June pushing back. Time will tell if he’s as successful in the nation’s capital as he has been across the country.