If you’re like most people, you’ve had to pay taxes to the Internal revenue Service each and every year to help the federal government fund infrastructure, social services, defense, disaster recovery, and a myriad of other crucial national priorities as set by Congress. Jared Kushner is not like most people.
The scion of a wealthy real estate development family, the president’s son-in-law, is suspected of paying little to no taxes — zero, zilch, nada — for the period of 2009 to 2016 despite a personal net worth that quintupled over the past decade to nearly $324 million, according to a revealing new report in The New York Times this morning.
The newspaper has managed to obtain confidential financial documents that were part of a submission in connection with a loan application to a potential lender and were described as:
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“Totaling more than 40 pages, they describe his business dealings, earnings, expenses and borrowing from 2009 to 2016. They contain information that was taken from Mr. Kushner’s federal tax filings, as well as other data provided by his advisers. The documents, mostly created last year, were shared with The Times by a person who has had financial dealings with Mr. Kushner and his family.”
The documents provide a depressing picture of how wealthy real estate investors like the Kushner family — and the Trump family — legally avoid paying their fair share of the federal tax burden and build their riches at the expense of every other citizen in the country. The Times explained how Kushner managed to build an even larger fortune using accounting tricks only available to already flush property investment professionals.
“His low tax bills are the result of a common tax-minimizing maneuver that, year after year, generated millions of dollars in losses for Mr. Kushner, according to the documents. But the losses were only on paper — Mr. Kushner and his company did not appear to actually lose any money. The losses were driven by depreciation, a tax benefit that lets real estate investors deduct a portion of the cost of their buildings from their taxable income every year.”
This tax avoidance maneuver allowed Kushner to earn $1.7 million in salary and investment income in 2015, for instance, but apply paper “losses” of $8.3 million to make his tax liabilities disappear into thin air, all without violating the tax codes. Unlike his father-in-law President Trump, Kushner has not yet been accused of falsifying records for tax fraud purposes, but The Times outlines the many ways that wealthy real estate developers can manipulate the depreciation regulations to make extremely profitable businesses look like they are losing money for IRS purposes.
And while Congress had the opportunity to prevent abuses like this when they revised the tax code last year, the billionaire-friendly legislation they did pass actually “expanded many of the benefits enjoyed by real estate investors, allowing them to reap even larger deductions,” according to The Times.
“The Trump administration was in a position to clean up the tax code and promised to get rid of some of the complexity that certain taxpayers use to their advantage,” said Victor Fleischer, a tax law professor at the University of California, Irvine. “Instead, they doubled down on those provisions, particularly the ones they have familiarity with to benefit themselves.”
The newspaper had 13 tax accountants and lawyers review the documents that they obtained from a person who has business dealing with the Kushner family. One of them, J. Richard Harvey Jr., a tax official in the Reagan, George W. Bush and Obama administrations, said that:
“assuming the documents accurately reflect information from his tax returns, Mr. Kushner appeared to have paid little or no federal income taxes during at least five of the past eight years. The other experts agreed and said Mr. Kushner probably didn’t pay much in the three other years, either.”
If the largesse that the federal tax code offers to rich property magnates wasn’t bad enough, the fact that much of the paper losses that offset Kushner’s tax liabilities were actually generated using borrowed money.
“In many cases, Mr. Kushner kicked in less than 1 percent of the purchase price, according to the documents. Even that small amount generally was paid for with loans. Mr. Kushner’s credit lines from banks rose to $46 million in 2016 from zero in 2009, the documents show,” The Times writes.
“The result: Mr. Kushner is getting tax-reducing losses for spending someone else’s money, which is permitted under the tax code. Depreciation deductions are available in other industries, but they generally don’t get to take losses related to spending with borrowed money.”
With President Trump having been elected with the votes of many people who chose him because they felt that the system was rigged against them and were bamboozled into believing that this con man was actually going to tilt the board in their favor, the knowledge of how he and his family have been the primary beneficiaries of the rigged system — and have rigged it to favor them even more — is a bitter pill to swallow, if they pay any attention to it at all.
If nothing else the revelation about Kushner’s failure to contribute to the upkeep of our nation in exchange for enormous personal gain may serve as a career inspiration for selfish strivers going forward.
“If I had to live my life over again, I would have been in the real estate business,” said Jonathan Blattmachr, a well-known trusts and estates lawyer, now a principal at Pioneer Wealth Partners, who reviewed the Kushner documents. “It’s fantastic. You get tax deductions for things you don’t pay for.”
It’s time to fix the rigged system. Vote blue in the November midterms and elect Democrats who will fight to revise the tax code to make the wealthy pay their fair share.
Follow Vinnie Longobardo on Twitter.