A Trump empire built on $885 million in tax breaks has cost the city a fortune

Posted On Mon, September 19, 2016 By

Posted On Mon, September 19, 2016 By In Celebrities, Policy, real estate trends

If you’ve followed Republican presidential nominee Donald J. Trump‘s gold-plated real estate career, you might already know how much of his success has been due to his family’s extensive political connections–and generous tax breaks, grants and incentives from the government and taxpayers. In case you haven’t read Trump’s 1987 bestseller “The Art of the Deal,” the New York Times illuminates the role that hundreds of millions in tax breaks have played in the Trump empire. While Trump may not be much different from other developers in seeking tax breaks, the candidate vociferously paints a picture of a rigged system and a fixed game. But these very fixes have enabled him to achieve a net worth estimated at 4.5 billion and the opportunity to indulge a run for the nation’s highest office.

trump tower

Trump’s first solo success, as the story goes, was the conversion of a run-down 42nd Street hotel into the black glass-clad 30-story Grand Hyatt, whose profits exceeded $30 million a year by the time his book was published. According to the Times, “An extraordinary 40-year tax break that enabled Trump to get the hotel built has cost New York City $360 million to date in forgiven, or uncollected, taxes, with four years still to run.”

In his subsequent career, Trump has received over $885 million in tax breaks, grants and subsidies for luxury properties in New York City. In a lawsuit that spanned nearly two decades, he won a similar tax break for Trump World Tower, a building that offers some of the city’s highest-priced condominiums. Tax breaks for these two projects alone ring in at $157 million.

Trump has made it a point of pride that, “as a businessman I want to pay as little tax as possible.” To be fair, Trump is, after all, the Republican nominee; Republicans don’t like taxes. And the Times explains why tax breaks are crucial to developers, providing enough income to operate during a building’s often protracted construction phase when there are no sales or rental incomes being generated and building costs are piling up.

But, says Alicia Glen, Mayor Bill de Blasio’s deputy mayor for housing and economic development, who first fought Trump when she worked in Rudolph W. Giuliani’s administration. “Donald Trump is probably worse than any other developer in his relentless pursuit of every single dime of taxpayer subsidies he can get his paws on.”

Trump also took advantage of the relationships his father, Fred C. Trump, had with the city’s movers and shakers including Mayor Hugh L. Carey and Mayor Abraham D. Beame. The elder Trump was a significant contributor to both politicians.

In the case of Trump Tower, his longtime home, company headquarters and brand flagship, Trump attempted to get a 10-year property tax break under the city’s 421-a program, created in 1971 to stimulate construction of housing in the city. The Koch administration rejected Trump’s application, saying the project did not qualify for public funding. Trump sued the city in 1981. According to the city’s finance department, he eventually received $22.5 million in benefits to build “the ultimate vision of an elegant life seen through a golden eye,” and later got an additional $15 million tax break.

There’s a pattern here: When planning a new luxury development, Trump would seek tax subsidies, and the city would determine that the development wasn’t eligible. Then he’d sue, and end up with benefits through a subsequent settlement.

Which, of course, has been good for the Trump business. But taxes are one of our most relevant means of contributing to the public benefit. The candidate’s skill at tapping the city’s resources to pay himself is not in any doubt here. What’s so dubious is his chosen position as an outsider, chafing at the very system that has allowed him to do that so successfully.

[Via NYTimes]


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