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Trump’s Financial History and the Great Wealth Transfer

Jason Fehrnstrom, Scarlet Staff

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The upheaval concerning Judge Kavanaugh’s appointment process has overshadowed groundbreaking revelations into President Trump’s financial history published by the New York Times. The results of their eighteen month investigation reveals realities about Trump’s ascendance to wealth that are entirely at odds with the narrative he has promulgated in his books, entertainment and political career.

Trump’s self-styled mythic narrative regarding his success became an integral dimension of his 2016 presidential campaign. Trump famously declared that the only help he received from his father, a New York real estate magnate, was a “small million dollar loan”(NYT).  More than that, Trump has indicated that “I had to pay him back with interest!”(NYT)

This seductive narrative beguiled a considerable portion of Americans. Trump’s perceived political credibility became inextricably linked with his ostensible capabilities as an innovative businessman. Millions of Americans voted for Trump because they conceived that his business acumen would be highly transferable and applicable to the office of the President.

The NYT amassed a comprehensive, eclectic body of financial evidence that effectively undermines any notion of Trump being “self-made.” Hundreds of thousands of documents including mortgage deeds, court files, tax documents, bank statements, and a litany of other financial information reveal the extent to which Trump was dependent upon his father’s wealth during his ascendancy to fame and wealth.

Trump was already receiving $200,000 a year in today’s dollars by the age of three. By age 8, he was already a millionaire. Unsurprisingly, this pattern of dependence upon Fred Trump continued into Trump’s adulthood. Trump’s portion of ownership in his father’s real estate holdings was earning him nearly a million dollars annually by the time he graduated from college.

The New York Times identified “295 distinct streams of revenue Fred Trump created over five decades to channel wealth to his son.” (NYT) Many of these interactions were legally questionable. Trump and his siblings setup a sham cleaning supplies corporation to disguise millions of dollars in untaxed gifts. Furthermore, Trump and his siblings used complicated financial instruments and savvy accounting techniques to evade taxes on his father’s inheritance.

Trump had a considerable amount of wind in his sails. His self-styled image as a self-made billionaire is not rooted in objective reality. This is not news to Trump’s critics. The lionshare of the political left has always maintained a incredulous attitude towards Trump’s delusions of grandeur.

Indeed, these revelations about Trump’s dependency on his father’s wealth have receded to the background of this month’s media landscape. This is troubling. Trump’s story of inherited wealth and intergenerational dependence is indicative of a trend in economic history that will have a profound impact on the country’s foreseeable future.

Currently, it is estimated that 35-45 percent of wealth in America is inherited rather than self-made (Brookings). Additionally, it is estimated that in the next twenty years there will be a wealth transfer of up to $30 trillion dollars. Some estimates place it as high as $59 trillion. Economists have already begun to refer to this event on the horizon as the “The Great Wealth Transfer”(Investopedia).

Indeed, we are heading into an economic paradigm where position at birth may matter more than talent, perseverance, innovation, and effort. An untold number of people will find themselves in financial positions analogous to that experienced by Mr. Trump.

The lionshare of people need a crafty, innovative plan to succeed in today’s stratified, high-tech, knowledge economy. Conversely, the recipients of the Great Wealth Transfer will need a plan to fail. The arbitrary circumstance of their birth will enable them to bumble, as Mr. Trump did, into bankruptcies and failed ventures and still maintain their powerful positions.

There is nothing inherently wrong with inherited wealth. Radical proposals that demand a 100% inheritance tax fail to remedy inequality violate the wishes of the deceased. People care most deeply about those that they love. As long as the granters and recipients are not breaking or bending any laws, as the Trumps did, they should be able to pass along wealth to their descendants.

However, with that being said, there needs to be a considerable amount of discussion about how we respond to and contextualize inherited wealth in our social and political discourse.

Trump has unleashed a seductive narrative about his own ascendancy into our political landscape. It is likely that many recipients of inherited wealth who are unwilling to recognize their own structural advantages tell themselves a similar story.

This narrative will be untenable in the era of The Great Wealth Transfer. Americans pride themselves on having a fair country that allows for socio-economic mobility. However, it is evident that many win the game before they even step up to the batter’s box.

As I stated before, those who have “won the game” have not violated any moral principle. However, people in these lucky positions ought to recognize their structural advantages and support policies that promote a high degree of social mobility for those who were born into inopportune situations.

In my estimation, this recognition and support is highly compatible with the philosophical underpinnings of the “American Dream.” The automatic winners should respect and support those who must scrap, claw, innovate, and sweat for their success.

NYT→ https://www.nytimes.com/interactive/2018/10/02/us/politics/donald-trump-tax-schemes-fred-trum p.html

Brookings→  https://www.brookings.edu/blog/social-mobility-memos/2015/01/30/wealth-inheritance-and-socia l-mobility/

Investopedia https://www.investopedia.com/advisor-network/articles/great-wealth-transfer/

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Trump’s Financial History and the Great Wealth Transfer