Trump’s Reckless Driving

Based upon tax case law, estate tax compliance is like speed limit enforcement, 5 miles an hour over the posted limit, troopers look the other way. Similarly, stretch property valuations and annual gift discounts +/- 5 or 10 percent on estate tax returns; no harm, no foul.

How Fred and Donald, and then just Donald, via their estate attorneys, drove 120 miles per hour on streets marked as “40”, year after year, I have no idea. Does the “I” in IRS stand for “Incompetent”?

Something else I have no idea about. How do any honest, hardworking people of modest means, who pay all of their taxes, support this serial short cutter whose actions suggest he doesn’t give a damn about the common good?

From the New York Times investigative report:

“They (father Fred and Donald) were both fluent in the language of half-truths and lies, interviews and records show. They both delighted in transgressing without getting caught. They were both wizards at manipulating the value of their assets, making them appear worth a lot or a little depending on their needs.

Those talents came in handy when Fred Trump Jr. died, on Sept. 26, 1981, at age 42 from complications of alcoholism, leaving a son and a daughter. The executors of his estate were his father and his brother Donald.

Fred Trump Jr.’s largest asset was his stake in seven of the eight buildings his father had transferred to his children. The Trumps would claim that those properties were worth $90.4 million when they finished converting them to cooperatives within a few years of his death. At that value, his stake could have generated an estate tax bill of nearly $10 million.

But the tax return signed by Donald Trump and his father claimed that Fred Trump Jr.’s estate owed just $737,861. This result was achieved by lowballing all seven buildings. Instead of valuing them at $90.4 million, Fred and Donald Trump submitted appraisals putting them at $13.2 million.

Emblematic of their audacity was Park Briar, a 150-unit building in Queens. As it happened, 18 days before Fred Trump Jr.’s death, the Trump siblings had submitted Park Briar’s co-op conversion plan, stating under oath that the building was worth $17.1 million. Yet as Fred Trump Jr.’s executors, Donald Trump and his father claimed on the tax return that Park Briar was worth $2.9 million  when Fred Trump Jr. died.

This fantastical claim — that Park Briar should be taxed as if its value had fallen 83 percent in 18 days — slid past the I.R.S. with barely a protest. An auditor insisted the value should be increased by $100,000, to $3 million.”

What the Affordable Care Act Gets Wrong

Poor form to be contrarian following a week liberals can’t stop celebrating, but count your blessings I’m done writing about golf. For now at least. I always reserve my right to tap my inner Alan Shipnuck.

Thursday night near the end of another spirited training ride. Soft spinning on North Street, two friends and I head for home. One is a well-to-do 59 year old who just retired. His very nice lake home is paid for and he and his wife just returned from another trip to Europe. Euro vacations aside, as his threadbare cycling gloves illustrate, he’s actually on the frugal side. He says he can afford the vacations because of the gloves. Decades of having made very good money no doubt help too.

“You’ll never guess what medical plan I’ve signed up for,” he says. “No clue,” I replied. “Medicaid!” “Wait, you’re 65?!” “No, I’m 59, that’s Medicare. I was surprised to learn I qualify for Medicaid because I have no income now.”

Quick google search. Medicaid is “a U.S. government program, financed by federal, state, and local funds, of hospitalization and medical insurance for persons of all ages within certain income limits.”

I was stunned. He told me a person can make about $20k/year and still qualify for Medicaid. He hardly has any capital gains because he hasn’t sold any assets for a long time. Apart from his international vacations, I’m guessing his expenses are minimal and he’s living off of savings that he previously set aside. I’m not sure how he’s sheltered his wife’s income.

Then he tells me the adult son of a mutual cycling friend is also getting “free” Medicaid despite the fact that he has a very large trust fund that must consist of tax-free municipal bonds.

Undoubtedly, if my friends are doing this, so are other high wealth/low income people. Especially those whose income stems largely from tax-free municipal bonds. Why isn’t anyone writing about this gigantic loophole and what we should do to close it?

More generally, why does the Affordable Care Act (ACA) use income as it’s sole reference point instead of some combination of income and wealth? The same can be asked about the IRS and college financial aid offices. When it comes to health care premiums, college financial aid, and taxes more generally, it’s far better to be wealthy than to have lots of income. Just ask Mitt Romney. My guess is, and I’d love a more tax savvy reader to enlighten us on this, IRS agents, ACA bureaucrats, and college financial aid officials are unable to determine people’s total wealth with any certainty.

Why not ballpark it though I wonder. If the government knew my friend owned his home outright, would it compromise his Second Amendment rights to privacy? How do we balance well-to-do people’s right to privacy with public policies that, through subsidies, take from those of modest wealth and give to those with considerably more?