Like father, like son-in-law. Over the span of a decade, Jared Kushner’s family company has become a billion-dollar juggernaut in the real estate industry, enriching him with soaring stock investments, personal assets and a healthy net worth that’s upwards of $325 million. The president’s son-in-law is living quite the cushy life, and with that comes an ability to avoid paying taxes on vast amounts of wealth, according to the confidential financial documents obtained by The New York Times.
On Sunday, journalists Jesse Drucker and Emily Flitter reported that Kushner, the senior White House advisor and husband of Ivanka Trump, paid little to no federal income taxes from the years 2009 to 2016, just before entering public office and severing his private market ties. From their review of the man’s business dealings, earnings, expenses, and borrowing, it was revealed Kushner used technically legal “common tax-minimizing maneuvers”.
The Times explains that year after year, Kushner’s financial documents recorded millions of dollars in losses, enabling him to skimp out on paying taxes, meanwhile, significant gains were happening at the same time. So what was Kushner’s secret legal trick? It’s known by the name “depreciation,” a tax process that is meant to protect real estate investors from their buildings losing money over time due to wear and tear.
We can consider this an age deduction for an individual’s aging property. The problem is this deduction doesn’t consider age to be a factor in the increase of value. You can see this value system in practice when it comes to collectors. A new product can be outshined by an old one, and vice versa, depending on the differing circumstances. Value, or lack thereof, fluctuates over time, meaning it’s so complex that simple tax legislation can’t always pin it down accurately.
With regards the Kushner, the age deduction can be recorded on paper while a significant value is still being made. One example the newspaper listed was from 2015, back when Kushner’s salary and investment gains were documented to be over $1.7M per year, though his lawyers declared over $8.3M in potential losses because of “significant depreciation”.
Under this tax system, there’s no real process to term whether a claim is justified. It’s all done through one’s own personal lawyers and the IRS just stamps it and move on. Sure, there were no laws broken according to these documents, though it demonstrates that the tax code is ripe with loopholes, exploited by the rich without any substantial checks and balances. The law just assumes that value plus time equals losses, therefore, less due taxes. It’s an inaccurate, exploitative rule for those who know how to play the game.
The Times report:
“Kushner Companies, like many real estate firms, passes on any tax obligations to its owners, including Mr. Kushner and his father, who incorporate them into their personal tax returns. Unlike typical wage earners, the owners of such companies can report losses for tax purposes. When a firm like Kushner Companies reports expenses in excess of its income, the result is a ‘net operating loss.’ That loss can wipe out any taxes that the company’s owner otherwise would owe.”
“Depending on the size of the loss,” they continued, “it can even be used to get refunds for taxes paid in prior years or eliminate tax bills in future years. In theory, the depreciation provision is supposed to shield real estate developers from having their investments whittled away by wear and tear on their buildings. In practice, though, the allowance often represents a lucrative giveaway to developers like Mr. Trump and Mr. Kushner.”
Their step-by-step breakdown of Kushner’s financial tricks was also published.
“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, who spoke with The Times last week. “Instead, they doubled down on those provisions, particularly the ones they have familiarity with, just to further benefit themselves.”
It was this same corrupt tax system that helped propel President Trump into office. Since 2016, Trump can be seen at rallies declaring his promises to ‘simplify’ the process that ‘wastes so much time and money’ and benefits the economic establishment. Yet two years haven’t shown results on this front. Vox examined how the Republican tax bill in December of last year largely cuts taxes for most Americans, though were disproportionately benefiting the rich and corporations, going as far as expanding real estate benefits that enabled the likes of Trump and his son-in-law, to make larger deductions than previously recorded on their finances.
Trump, on the other hand, seems to prefer the legal and illegal kinds of tax dodging. As Kushner just enjoys the benefits of a broken tax system, Trump has made sure to shield his tax returns that could likely vindicate several investigations conducted by The New York Times. The president’s chosen newspaper of scorn published Trump’s 1995 income tax returns which found he declared a $916 million loss that year, meaning he could have avoided paying federal income taxes for decades. This was a whole year before their recent bombshell report revealing the president laundered over $450K in modern US currency that was inherited from his parents, which could constitute as a federal crime or a significant civil penalty subject to a lawsuit if found guilty.
