EMCEE: New question, new subject. When are you going to release your tax returns?
DONALD TRUMP: Well, we're having them made, they're extremely complicated. It's going to take a little while. I — I dunno …
ILYA MARRITZ: From the moment he entered the race for president, the issue of taxes stuck to Donald Trump like gum on the sole of his shoe.
NEWS HOST: What’s the hold up?
DONALD TRUMP: They’re very … Well, it's — they’re very big tax returns. The biggest — I guarantee you this — the biggest ever in the history of what we're doing. So it's very complicated stuff, but we'll be releasing them.
MARRITZ: Eight months after entering the race and offering vague excuses, Trump finally gave a concrete reason not to do what every major party presidential nominee has done for decades. In a debate, he said he's under audit by the Internal Revenue Service.
DONALD TRUMP: As far as my return, I want to file it — except, for many years, I've been audited every year. 12 years, or something like that. Every year they audit me, audit me, audit me.
MARRITZ: Tax experts say it doesn't usually work that way.
DONALD TRUMP: I have friends that are very wealthy people. They never get audited. I get audited every year. I will absolutely give my return, but I'm being audited now for two or three years. So I can't do it until the audit is finished, obviously. And I think people would understand that.
MARRITZ: A few days later, Forbes Magazine published an opinion piece by a Beverly Hills tax attorney, responding to Trump's statement.
This lawyer wrote that, as a wealthy man, Trump was likely the target of a special group within the IRS. The group is informally known as the Wealth Squad, and includes highly trained examiners who look beyond the single tax return to all the related business entities. An examination by the wealth squad can take years, he wrote.
[PLUCKY STRING MUSIC PLAYS]
MARRITZ: Quote, “Would any experienced tax lawyer representing Trump in an IRS audit advise him to publicly release his tax returns during the audit? Absolutely not.” The man who wrote this is a respected tax attorney named Charles Rettig.
SENATOR ORRIN HATCH: The committee will come to order.
MARRITZ: Rettig’s name was in the news this summer.
SENATOR HATCH: I’d like to welcome everyone to today's hearing on the pending nomination of Mr. Charles Rettig, who has been nominated to serve as IRS commissioner — a very important position in this country.
MARRITZ: Last month, the Senate approved Charles Rettig’s nomination. The man who argued Donald Trump shouldn't show American voters his tax returns is now America's chief tax collector.
[TRUMP, INC. THEME MUSIC PLAYS UP]
MARRITZ: Hello, and welcome to Trump, Inc., an open investigation from ProPublica and WNYC. I'm Ilya Marritz from WNYC.
JESSE EISINGER: And I'm Jesse Eisinger from ProPublica.
MARRITZ: This season of Trump, Inc. is all about the ways people around the President are working to profit from his position — and one of the biggest, most direct ways is taxes.
EISINGER: It says something about the Trump administration's view of taxes that this is the guy — Charles Rettig — who Trump appointed to head up the IRS. Recent agency chiefs have been picked for their managerial experience, given that the IRS is a giant government bureaucracy. They’ve not been tax lawyers who spent their decades studying how to help rich clients creatively, legally work the system.
[PERSISTENT, DRIVING PIANO MUSIC PLAYS]
MARRITZ: Trump's decision not to release his own taxes — and then his decision to hire the guy who said that was a good idea? It leaves us with a lot of questions about one of Donald Trump's biggest legislative victories: the tax cut that passed last year.
EISINGER: This is the only major legislation signed by this president, and the main aspect of that overhaul is that it provides a huge cut for corporations and wealthy people. And there are specific tax cuts — aspects of the law — that, in particular, help Donald Trump and his allies and friends.
MARRITZ: And let's not forget all the ways the Trump family and the people around Trump have thumbed their nose at the IRS, years before those changes to the tax law — sometimes to the point of criminality or other legal violations.
There's campaign chairman Paul Manafort, convicted this year for a complex international tax fraud.
NEWS HOST: They include five counts of filing false tax returns on tens of millions of dollars in political consulting income.
MARRITZ: Personal lawyer Michael Cohen —
NEWS ANCHOR: Cohen pled guilty to eight felony charges. [FADES UNDER]
MARRITZ: — convicted of a domestic tax fraud that was actually very simple.
NEWS ANCHOR: [FADES BACK UP] … in which he failed to report approximately $4.1 million in reported income.
MARRITZ: Then there’s the Trumps themselves: Donald and his three eldest kids. They're named in a civil suit, here in New York. That suit is over the Trump Foundation —
NEWS REPORTER: It violated a legal prohibition against self-dealing. [FADES UNDER]
MARRITZ: — which allegedly violated a whole slew of IRS rules governing nonprofits.
NEWS REPORTER: [FADES BACK UP] … their family is, again, the opposite of charity. Now the details about self-dealing … [FADES OUT]
MARRITZ: The Trumps say they've done nothing wrong.
[MUSIC PLAYS UP FOR A MOMENT]
EISINGER: There’s a pattern to Trump and taxes, and that's what this episode is all about.
HILLARY CLINTON: He didn't pay any federal income tax. So —
DONALD TRUMP: That makes me smart.
EISINGER: Here's the pattern. And, by the way, it applies to both written rules — laws — and unwritten rules, like norms.
[MUSIC CHANGES TONE, BECOMES MORE PEPPY]
EISINGER: Number one, he ignores them — just like we told you — by not releasing his tax returns. Number two, he breaks them. Number three, now that he's president, he changes the rules.
MARRITZ: In this episode, we're going to show you all three of these things happening: ignore, break, change.
PRESIDENT TRUMP: I have legally used the tax laws to my benefit, and to the benefit of my company, my investors, and my employees. [CHEERING] I mean, honestly, I have brilliantly — I have brilliantly used those laws. [CHEERING]
MARRITZ: We’ll talk with a tax lawyer who specializes in helping rich people who get in trouble with the IRS, get out of trouble. She says it's a good time to be a wealthy rule-breaker. And we'll learn the specific tax benefits Trump and his family members are getting.
There is a ton we don't know about Donald Trump and taxes because he's kept his tax returns secret. One thing is sure — if Democrats take one or both houses of Congress this fall, they'll demand receipts. But thanks to some really excellent reporting, we know more than we did on Election Day 2016 about Trump's taxes.
EISINGER: We're going to start our tour with an exceptionally audacious creative tax-dodger: the President's late father, Fred Trump. Here we go.
MARRITZ: So who are you?
SUSANNE CRAIG: [LAUGHS] Just a simple Canadian [LAUGHTER] working at the New York Times.
MARRITZ: Susanne Craig is an investigative reporter. You may have read her recent story, reported with two other Times journalists, about how Donald Trump's father, Fred Trump, built a fortune, and passed it on to his children while paying as little in taxes as possible.
The story is almost as long as Shakespeare's Macbeth. Andrea read it three times. I went to see Susanne Craig the other day at work. She says, Fred Trump's wealth came from apartment complexes he built in Brooklyn and Queens after World War II, when demand was high.
FRED TRUMP: [CRACKLY] Well, anything we can do to get decent homes for veterans certainly should be done.
MARRITZ: We found this in the WNYC archives.
FRED TRUMP: [CRACKLY] Often the veteran was just married and had a small family, but there were no vacancies.
MARRITZ: Fred Trump put up unlovely brick buildings with lovely names, like Beachhaven, Shorehaven, Park Briar, and Belcrest Hall.
CRAIG: So we sort of treated each building like a little personality profile.
MARRITZ: A lot of people are obsessed with Trump's tax returns — probably no one more than Susanne Craig. She's the one who got a great scoop during the 2016 campaign. Someone actually mailed her part of Donald Trump's 1995 tax return, which he filed with his then-wife, Marla Maples. It showed a loss of almost a billion dollars.
CRAIG: Hard to wrap your head around in itself. But what that gave him, which was significant, was basically a gift card from the IRS in order to shelter taxable income up to a billion dollars going forward. So, in theory, you would think he maybe never would pay taxes again.
[ETHEREAL BUT LIGHTLY DARK MUSIC PLAYS]
MARRITZ: Craig's curiosity led her to a trove of over a hundred thousand pages of Trump family documents going back to the 1940s.
CRAIG: More than 200 tax returns from Fred Trump's empire, [PAUSE] bank statements, financial statements, his own personal bank records. It was incredible.
MARRITZ: She didn't tell us who gave it to her. It took Craig and her colleagues two or three weeks just to scan all the documents into a computer to actually digitize them. And then the reporters spent months reading and interpreting the documents. These numbers told a clear, consistent story about Fred Trump and his son Donald.
CRAIG: I think they took delight in the tax games that they played. Any dollar that they could keep away from the tax man was a victory for them.
MARRITZ: So let's touch on one of the tax dodges: Grantor Retained Annuity Trusts, or GRATs. This is a way a rich person can avoid inheritance taxes when passing on an asset to their child. This is done with real estate or stocks.
CRAIG: Things of value. You can even put pieces of art in them from one generation to another with paying either very little or no tax.
MARRITZ: Basically, the child pays their parent to buy the asset through a trust. They can save a lot of money by undervaluing that asset, and Craig says that's what the Trumps did here.
CRAIG: The tax man gets very little money. Actually, BDO does a commercial on it where there's a father and a daughter in a vineyard.
MARRITZ: BDO is an accounting firm. We watched the video together.
[COMMERCIAL CLIP STARTS]
BDO COMMERCIAL FATHER: You can't just inherit 4,000 acres.
BDO COMMERCIAL DAUGHTER: Dad, I’m not saying …
[CLIP FADES UNDER]
CRAIG: She’s proposing to him that she's got this great idea where you can transfer all this stuff to me, and put it in a — in a trust, and we won't really owe any taxes. And she doesn't use the word GRAT, but that's what they're talking about.
BDO COMMERCIAL DAUGHTER: There’s a way I can buy the business. We set up a trust, and that's how we transfer the stock.
BDO COMMERCIAL FATHER: But the estate taxes!
BDO COMMERCIAL DAUGHTER: There are no estate taxes. And you keep getting paid, same as before.
BDO COMMERCIAL FATHER: Let's run this by BDO.
BDO COMMERCIAL DAUGHTER: [ALMOST COOING] It was their idea.
[CRAIG AND MARRITZ LAUGH, THEN POUND THE TABLE]
CRAIG: That's the 30-second version. Isn't that incredible? That's a GRAT. That's interesting, though, because — you would only know what it was if you speak the secret language. And, obviously, a lot of people do.
EISINGER: According to the Times, the Trumps weren't just using a tax dodge that's advertised on TV. They were undervaluing the underlying asset — which can be illegal — all to avoid paying taxes. Some of the maneuvers the New York Times called, quote, “outright fraud.” And here we get to part two in our framework: Trump breaking the rules.
[DRIVING, UP-TEMPO MUSIC PLAYS]
CRAIG: It’s interesting how it worked. It's not really — it's not complicated in any way. It's sort of a bit out of a mobster kind of movie.
MARRITZ: For upkeep on his empire of dowdy, outer-borough apartment buildings, Fred Trump was regularly buying new equipment and supplies.
CRAIG: He would buy boilers. He would buy fridges and stoves. He would buy paint supplies.
MARRITZ: Nothing too strange about that.
CRAIG: And he was driving his own bargains, you know, building by building. And then, one day, All County shows up.
MARRITZ: All County Building Supply. Now this is a head-scratcher. To figure out what this was, one of the reporters from the Times went to the Bronx to talk to a guy who used to sell boilers to Fred Trump. His name is Leon Eastman.
CRAIG: And he remembers the deal he negotiated with Fred Trump in 1993 for 60 boilers. It was a huge deal for him. He remembers the lunch, he remembers the restaurant they went to, he remembers that he had to pay the tab.
And he said, “There was no All County at this lunch. It was Fred Trump and Fred Trump's people.” And the first thing you ever heard about All County was when the checks started rolling in, ‘cause they were cutting the checks for it.
[PLUCKY MUSIC PLAYS]
MARRITZ: You got this? The middleman company, All County Building Supply, is paying the price Fred Trump negotiated. And here's the trick — All County would then bill Fred Trump a higher price — a markup of 20%, or 50%, maybe more.
Why? Well, it turns out All County was owned by Donald Trump and his siblings and a cousin. So the markup on those boilers went straight from Fred Trump's pockets to the next generation.
CRAIG: And All County’s shareholders, Donald and his siblings, split the difference. That is simply a gift from Fred disguised as a business transaction.
MARRITZ: Whatever taxes they're paying here are certainly less than the gift tax or the estate tax.
EISINGER: Craig says, all told, Fred Trump was able to steer at least $1.6 billion of his wealth to his kids — and they all paid minimal taxes.
MARRITZ: The President's press secretary, Sarah Huckabee Sanders, says Donald Trump only got a $1 million loan from his dad. That's it. A lawyer for Trump called the Times’ reporting 100% false, and highly defamatory.
[MUSIC PLAYS UP, SLOWER THIS TIME]
MARRITZ: Is there a nickname for what they did with All County? Is there, like, a shorthand, like, in the business that people know for, like, what that is?
CRAIG: Not that I know of, no. There are maybe — do you — have you heard of one?
MARRITZ: Middle-manning? I don't know. [BOTH LAUGH] No, I haven’t.
CRAIG: Uh, yeah, it's something out of a movie.
EISINGER: We wanted to know how the Trumps’ maneuvers look to someone whose day-to-day job is helping rich people with taxes. So we called Jenny Johnson Ware.
JENNY JOHNSON WARE: I am a tax attorney who specializes in defending high net-worth taxpayers in criminal and civil matters with the IRS.
EISINGER: Ware basically does the same kind of work Charles Rettig did. He's the guy who Trump picked for commissioner of the beleaguered IRS. She thinks highly of him.
JOHNSON WARE: I think he actually understands tax enforcement. Uh, and will — will do his part to turn the agency around.
MARRITZ: Anyway, Ware read Susanne Craig's article. She was not entirely surprised. But the All County middle-manning thing? It did catch her attention, because it was perfectly designed to disappear in the blind spot of IRS auditors.
JOHNSON WARE: The fact that there was a disguised gift going out of the father's estate and into his children's estate without getting taxed would fall through the cracks. You would never notice it.
EISINGER: To catch a tax dodge like this, you would need to look at the big picture, she says. But typically the IRS doesn't do that. It takes a lot of resources. So let's say an examiner is scrutinizing a business partnership.
JOHNSON WARE: So they would pull one partnership return and take a look at it. Well, if that partnership is solely owned by an individual who owns 43 other partnerships, 27 as corporations, and 5 trusts, and it's doing business with those other entities —
MARRITZ: — then the IRS is going to miss a lot.
JOHNSON WARE: You have to understand how that entity functions within the unit of all of the other different entities owned by that family, and how their business relationships actually completed a gift to another generation.
[BRIEF MUSICAL FLOURISH]
EISINGER: “Gee,” you say, “the IRS ought to do something about that!” Well, guess what? Less than a decade ago, they did. They created the Global High-Wealth Industry Group, also known as the Wealth Squad.
MARRITZ: We talked about this right at the beginning of the episode. If Donald Trump is indeed under audit, this is the group that might be doing it.
JOHNSON WARE: Well, I first heard of it in 2009. Um, when Commissioner Shulman announced it and, um, really to great fanfare, talking about how this was a game-changing strategy for the IRS.
COMMISSIONER DOUG SHULMAN: [FROM AN OLDER BRIEFING] We have a new global high-wealth operating unit —
MARRITZ: Here’s IRS commissioner, Doug Shulman, the following year.
COMMISSIONER SHULMAN: — where we're taking a unified look at the entire web of business and economic entities controlled by high-wealth individuals. So we can better assess their … [FADES OUT]
JOHNSON WARE: All of a sudden, a lot of financial planners and trust-and-estates lawyers wanted to hear from me about how this was going to play out, and how this is going to affect their clients.
EISINGER: It took a while to figure this out, but the answer — at least for Ware’s clients — is, “Not so much.”
[MUSIC FLOURISH PLAYS]
JOHNSON WARE: It’s not a major stressor for high-wealth taxpayers the way it used to be, largely because those of us who've done a lot of audits have found that this didn't turn out to be as effective as we all feared.
EISINGER: The IRS doesn't make it civil cases public, so our knowledge of the group is limited.
EISINGER: So, in the beginning you had a bunch of these, and then they've tapered off. And in the last few years you've hardly had any, is that right?
JOHNSON WARE: Right. Like I — I think I closed the most recent one about 18 months ago and I haven't had any new ones come in.
[MUSICAL FLOURISH PLAYS]
MARRITZ: Partly this is because of bad planning, she says. The Wealth Squad just never found its place within the IRS. The leaders kept changing. But a big part of it was budget cuts, pushed by the Republican Congress.
EISINGER: My colleague, Paul Kiel, and I have been looking at this for months, and it's really astonishing.
[PLUNKY MUSIC PLAYS]
EISINGER: The IRS budget has been cut steadily since 2011. It's $2.5 billion less than it was back then. The number of auditors at the IRS is below 10,000. You know, when it was last that low? 1953, the year Stalin died. The economy was a 10th of the size it is today.
The rate at which the agency audits tax returns — that’s the bread and butter business of the IRS — well, that's plummeted 42% since the budget cuts. It’s basically a million audits a year. Of those million audits, do you know how many cases they bring criminally for tax evasion when you have legal income, but you've cheated on your taxes?
MARRITZ: I have no idea.
EISINGER: About 800. This is a country of 330 million people.
MARRITZ: If I were good at whistling, I'd whistle. [EISINGER LAUGHS, MARRITZ TRIES TO WHISTLE]
EISINGER: This all means that the IRS has a resource crisis, and huge pressing business, and a lot falls by the wayside. We requested an interview with the IRS. We submitted a list of questions. The agency did not respond.
MARRITZ: So, this is what was already happening when the man who bragged about not paying taxes, who hid his tax returns from the American people, who might himself be under audit by the Wealth Squad, was sworn in as president. And since then?
JOHNSON WARE: Morale is also really, really down among the enforcement units within the IRS. And they've been distracted doing other things.
MARRITZ: What other things? Big things.
PRESIDENT TRUMP: Most Americans will be able to file taxes on a single sheet of paper. What do you think about that, Kevin? You're still there or is it … [THE SOUND OF MEN LAUGHING AND RIBBING EACH OTHER]
EISINGER: Trump made it clear when he became president that one of his top priorities was rewriting the tax code, and, within months, he and the Republican Congress succeeded.
NEWS ANCHOR 1: It’s official, the House has passed the tax bill. President expected to sign it. The only question is when.
NEWS ANCHOR 2: And where.
NEWS ANCHOR 1: And where. [NEWS ANCHOR 2 LAUGHS] Uh, and we do expect to hear from President Trump, uh, once again, this afternoon.
PRESIDENT TRUMP: So this is the bill right here, and we're very proud of it. It's a — uh, it’s going to be a tremendous thing for the American people. It's going to be fantastic for the economy. [FADES DOWN]
MARRITZ: A wholesale rewrite of the tax code, on a scale that hasn't been seen since the time of Ronald Reagan.
PRESIDENT TRUMP: [FADES UP] … we’re going to sign this. This is a little picture of it. It fits nicely in the box.
MARRITZ: Jenny Johnson Ware can see that it's put the IRS under enormous strain.
JOHNSON WARE: The IRS is not putting out guidance. They're not telling people how they intend to interpret the new law. So many things are so very different in the new law, and we can't get any guidance about how it's supposed to work from an IRS that doesn't have any employees or budgets to give us that guidance.
[BOUNCY, HEAVY MUSIC PLAYS]
EISINGER: What's the overall picture for the wealthy in the United States when it comes to taxes? Is it a good time to be wealthy in the United States, if you, uh, are aggressive about your tax planning?
JOHNSON WARE: Probably so. For taxpayers who want to play the audit lottery and be very aggressive in their positions and just hope they never get chosen, or hope that if they do get chosen, they can hire me to navigate them through that process, um, it's a great time for those taxpayers, because all the enforcement personnel across the board are way down. People are retiring and they're not being replaced. And the IRS can only do so much with so little.
MARRITZ: We’ll be right back.
[MUSICAL FLOURISH PLAYS]
MARRITZ: We’ve seen how Trump ignores rules and norms on taxes, how he breaks them. Now, how he's changing them as president.
EISINGER: So Donald Trump and the Republican Congress passed a giant tax overhaul. It was sold as a tax reform, and it was sold as a tax simplification. Um, was it?
JESSE DRUCKER: No, absolutely not. I mean — I mean, it’s [STAMMERING] — it. [CHUCKLES] I mean, where to begin?
MARRITZ: This is Jesse Drucker. He's a reporter at the New York Times who has spent years reporting on the intricacies of our tax system.
DRUCKER: The tax overhaul, both introduced kind of new — not just complexity, but also sort of incomprehensible complexity.
EISINGER: Drucker — who, by the way, is a friend of mine — says the entire process of drafting legislation was rushed.
DRUCKER: There were no hearings to kind of explain why this industry should be favored and that one shouldn't be. Um, and that was kind of like a massive tax cut for certain segments with no discussion of why it was happening.
[LIGHT MUSIC PLAYS]
EISINGER: The tax code was already friendly to real estate investors, and in the new code, some of these friendly provisions have been expanded. Let's have a look.
DRUCKER: One of them is called depreciation. The way it works is, when you … [FADES UNDER]
EISINGER: Basically, the tax code has long recognized that certain kinds of property — like factory equipment — encounter wear and tear in the course of a year. The owners take a deduction on their taxes based on the value of the equipment's lost. This applies to commercial building owners, even though their property often gains in value.
MARRITZ: How generous is this spell they called depreciation? Jesse Drucker reported, based on documents he reviewed, that over an eight year period, President Trump's son-in-law, Jared Kushner, probably paid little or no federal income tax in five of those years. He could avoid taxes because he owns a lot of real estate and, on paper, he could report a lot of depreciation.
DRUCKER: You can have — in the real world — lots of real-world profit and free cash for you and your business, but you're getting this deduction essentially for expenses that you don't really pay in the real world.
EISINGER: Now, can I do this? If I have my — my cabinets, uh, need replacing. Haven't they lost value? Haven’t they depreciated?
DRUCKER: Well, I think your — well, your cabinets actually look pretty good —
EISINGER: Thank you.
DRUCKER: — but I think that, no. So — so the issue is that this is something that applies to someone's business investment, right? You as a — as a homeowner, or an apartment owner, you don't get to take advantage of this.
[REPETITIVE MUSICAL FLOURISH PLAYS]
MARRITZ: That’s a big tax perk for the real estate industry and the Jared Kushners of the world. It's existed for years. A spokesman told the Times that Kushner, quote, “paid all taxes due.” Now let's move to Inauguration Day 2017.
DRUCKER: The Trump administration comes into office, and they're in office for less than a year, and the President signed this massive overhaul of the country's tax laws that the — specifically made the provisions that Jared Kushner uses even more generous. They basically opened up the opportunities to take much bigger, much faster deductions related to depreciation.
[PLUNKY MUSIC PLAYS]
EISINGER: There's one more perk you need to know about that’s benefiting the Kushners. It has a classic IRS name: 1031 like-kind exchanges.
DRUCKER: There’s nothing unusual or nefarious about this.
MARRITZ: It just says, if you sell a thing of value, you can avoid paying capital gains tax by buying something similar within a given timeframe.
EISINGER: 1031s have been used in lots of industries: livestock, coins, aircraft. All kinds of assets. When people want to swap one cow, one Cessna for another, or an impressionist painting.
DRUCKER: It’s very popular in the art field.
EISINGER: And this is one text advantage that actually was removed in the new law. Well, It was removed for some investors.
DRUCKER: And the tax law overhaul signed by the President last year, eliminated 1031 ones for every industry in America, except one: real estate.
[HEAVY MUSIC PLAYS]
MARRITZ: Polling shows the tax rewrite is not popular with the American people. There are even things the real estate industry doesn't like, like a reduced tax deduction for mortgage interest payments on expensive homes. But, overall, this industry did strikingly well.
DRUCKER: The reason this is important is, we're kind of looking at Jared Kushner's taxes through the prism of his ability to take advantage of things that are in the tax law. And the two things that we're aware of that drove his tax bill so low were made more generous in the law.
MARRITZ: Did he have any hand in writing the law?
DRUCKER: Well, you know, it’s a really interesting question. I mean, we asked his spokesman what role he had in some of the provisions that were made more generous that he took advantage of. And, uh, they wouldn't answer. And I was a little surprised they — they — I mean, they — they definitely didn't say he had no role in it.
[MUSIC CHANGES TO BECOME DRIER]
MARRITZ: Humankind has not always paid taxes. Before the dawn of agriculture, people foraged and hunted their food. There was no government, and nothing for the government to take. It was only when people started growing grain, historians believe, that the first states came into existence — and the first taxes.
At the end of the season, the farmers needed to protect the grain they had grown. So they paid the prince a portion of their wheat. It's around this time that cats were domesticated as another way to guard your grain. Anyway, this social contract — pay your taxes, get government protection — it’s been with us ever since, in ever-more complicated forms. Taxes predate democracy. They're a necessary condition for the functioning of society.
EISINGER: [DRYLY] Okay, so that's pretty highfalutin. Thank you for the history lesson, Ilya.
MARRITZ: Oh, you’re very welcome.
EISINGER: But let's think about what has actually happened with Fred and Donald and Jared. They have, as we all know, commercial real estate businesses. That’s not a piece of breakthrough intellectual property, or some disruptive business model. Success in commercial real estate is much more dependent on having a solid tax base in their local area, which means real estate appreciates when a city functions — when there's low crime because the police are funded, when there are job opportunities because people live there and create businesses and they have a customer base, the parks are beautiful, the roads and bridges and subways function, when the schools are adequately funded and providing education, when people get subsidies to afford the rent. That all takes tax dollars.
EISINGER: So what did Fred and Donald and Jared do? Well, they took those tax dollars going into New York City and New Jersey — which thrived as New York did — and privatized a portion of the public gain. They owe their wealth in large part, it can be said, to our collective payments. And there's more. They gamed the tax system so they would pay even less. Then, they get into power and they gave themselves huge tax cuts. Effectively, they were finalizing their transfer of public spending to their private purse.
[CREDITS MUSIC PLAYS]
MARRITZ: We are starting to see the consequences of the tax overhaul. This month, the Treasury Department reported that corporate tax revenue is down 31%. President Trump promised economic growth, and that is happening. But —
NEWS HOST 1: U.S. federal deficits spiking 17% from a year ago.
NEWS ANCHOR: Bringing the deficit to $779 billion.
NEWS HOST 2: It’s the highest the deficit has been in six years.
MARRITZ: Republican leaders are warning there may have to be cuts to social programs. Remember, this overhaul is the first true rewrite of the tax code since Ronald Reagan. And if history is a guide, it will be with us long after Trump has exited the stage.
[MUSIC UP FOR A MOMENT]
MARRITZ: Coming up on Trump, Inc., the President's part-time unpaid lawyer, Rudy Giuliani.
RUDY GIULIANI: [OVER A CHANTING CROWD] Raising change, raising change. Absolutely! Let ‘em hear it.
MARRITZ: How does he make money?
GIULIANI: Let ‘em hear it in Tehran.
MARRITZ: By the way, we love tips. And right now we're looking to hear from people who've had experience owning property in Trump-branded buildings that later failed. If that's you or someone you know, we want to hear about it. Go to TrumpIncPodcast.org to find out how to get in touch.
This episode was produced by Megan Detrie. The Senior Producer is Meg Cramer. The Associate Producer is Alice Wilder. Bill Moss is the Technical Director, with additional help from James Coyle. Charlie Herman, Nick Varchaver, and Eric Umansky are the editors. Robin Fields is ProPublica's Managing Editor. Jim Schachter is the Vice President for News at WNYC, and Steve Engelberg is the Editor-in-Chief at ProPublica.
We sincerely thank Paul Kiel, Anjali Tsui, Anjali Kamat, and Elise Bean for their help in making this episode. The music is by Hannis Brown.