Trump’s Gentrification Scheme to Enrich Real Estate Developers
https://newrepublic.com/article/152670/trumps-gentrification-scheme-enrich-real-estate-developers?mc_cid=9df5a181fb&mc_eid=19c0df1544
A tax loophole intended to help the poor is funneling money to wealthy investors.
By BRYCE COVERT
December 28, 2018
Buried within the more
than 500 pages of Donald Trump’s 2017 tax cut was an unobtrusive line item with
potentially damaging consequences. Proposed by Senator Tim Scott of South
Carolina, the provision allows governors to select certain census tracts in
their states, in economically distressed areas, as “opportunity zones.” The
Treasury certified the last of these zones in June, bringing the total number
to 8,700. Now, investors who fund projects in these areas will get sizable tax
breaks—even on unrelated investments. As long as they dump profits into a fund
earmarked for the opportunity zones, they can defer or even eliminate the
capital gains they would otherwise have owed.
Some of the
census tracts that have been identified as opportunity zones may be truly
distressed. But it’s dubious whether others should qualify—this summer, for
example, much of Long Island City in New York was named an opportunity zone.
Now that Amazon has announced it’s moving one of its two HQ2 branches there,
the retail behemoth could nab a $225 million tax break simply because the site
happens to fall in one such zone—this, on top of the $1.7 billion New York has
already offered Amazon. Investors who purchase apartment buildings for the
influx of tech employees will also see tax breaks. So will anyone building
office parks, or grocery stores. That money may well be better spent elsewhere,
but during the debate over the tax bill, such questions received very little
attention. Neither, really, did the zones themselves. Since its passage,
though, President Donald Trump has enthusiastically promoted the plan, issuing
press releases boasting that “new investment will flow into blighted
developments, stalled infrastructure projects, and other desperately needed
economic enhancements” and create fiscal improvements that will “help turn
dreams to reality.”
The thinking
behind the zones reflects Republican faith in privatization as a cure-all. If
Trump has departed from conservative orthodoxy on trade and entitlements, he is
squarely with the party when it comes to this issue. On the campaign trail, he
promised to spend $1.5 trillion on the country’s infrastructure, but when the
details of his plan were released a month before the election, it was merely a
proposal to privatize roads, bridges, and waterways. Trump has similar plans
for the nation’s air traffic control system, the Department of Veterans
Affairs, and even the Postal Service. Each one offers huge upsides for a select
group of financiers and business owners, but does little to nothing for the
American people.
None of these
promises has fully gone into law—apart from opportunity zones, the first of
which the Treasury implemented this spring. Since then, a number of funds have
cropped up to cash in on the boom. Anthony Scaramucci, who served as Trump’s
director of communications for all of ten days, plans to launch a $3 billion
“opportunity fund” at his hedge fund Skybridge Capital. Cadre, the real estate
crowdfunding platform partially owned by Jared Kushner and his brother, Joshua,
is also focused on exploiting the zones. As Charles Clinton, the CEO of
EquityMultiple, a real estate investment startup, said in September, they are
“one of the biggest real estate investment opportunities in decades.”
Similar
efforts have been undertaken in the past. In the 1980s, Margaret Thatcher
created eleven “enterprise zones” in the United Kingdom, which produced fewer
jobs than promised. Each cost the government between $35,000 and $45,000,
indexed for inflation. The areas are still home to some of the poorest people
in the country. During the 1990s, Bill Clinton set up 104 “empowerment zones”
in six urban areas around the United States, including Atlanta, Baltimore, and
New York, as well as three rural areas, in Kentucky, Mississippi, and Texas.
Clinton’s plan (unlike Trump’s) tried to encourage not just capital investment,
but also hiring and upfront investments in equipment. But research on
empowerment zones has found that they had little to no effect on economic
growth or poverty. They were expensive, too, costing $850 per resident.
One of the
reasons why these zones often fail to deliver an economic boost is that
governors and investors tend to pick areas that are already on an upswing.
(Long Island City is a good example; it had been gentrifying for years before
Andrew Cuomo nominated it as an opportunity zone.) In May, the Urban Institute
found that 28 percent of the census tracts governors had designated as
opportunity zones already benefit from some of the highest levels of private
investment. They’d be attractive areas in which to invest with or without a big
tax giveaway. In other words, opportunity zones are a massive handout for
investors, and there is scant evidence that they bring investment to the places
that need it most.
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Of course,
Trump himself has experience bilking tax breaks and subsidies to make massive
profits. He accumulated at least $885 million in tax breaks, grants, and other
subsidies from New York to build his empire of hotels and high rises, according
to The New York Times, including the longest tax abatement the city ever handed
out, 40 years, to rehabilitate the Grand Hyatt Hotel in the ’70s. He even
pocketed $150,000 from a fund meant to help small businesses damaged in the
September 11 attacks. (He owned a Wall Street skyscraper not far from Ground
Zero, but it wasn’t damaged when the planes hit the Twin Towers.) Trump may be
the country’s preeminent expert in spotting a government handout to developers
and squeezing it for all it’s worth. It’s no surprise that he’d be as excited
to stamp his name on these opportunity zones as he would one of his hotels.
Trump may be
the country’s preeminent expert in spotting a government handout and squeezing
it for all it’s worth.
But these
misguided policies have lasting consequences. For one, there is no way to
ensure that investors who were already planning to put money into housing or
infrastructure don’t just decide to do it in opportunity zones to reap the tax
benefits. Second, the zones typically allow investors to retain complete
control over their projects. After state governments designate the areas, local
communities get no say over what is invested in and by whom. Don’t like the new
toll road in your town financed by a hedge fund? You may have no way to vote it
down or give input into how it’s implemented.
There’s a
better way. Lyndon Johnson’s Great Society directly financed construction
across the country. Dwight Eisenhower built the country’s network of highways.
The bipartisan Community Development Block Grant program, enacted in 1974 by
Republican President Gerald Ford, gives local communities money for projects
they decide are most important for their economies—a program that Trump wants
to eliminate.
The Joint
Committee on Taxation has estimated that the tax incentives in opportunity
zones will cost $1.5 billion a year for the first eight years. Just think what
that money could do if directed to build new water lines in Flint, affordable
housing in Fresno, decent school buildings in Baltimore, or better roads in
Akron. Bankers on Wall Street might not get a payday. But do we care more about
their dreams, or those of poor residents in neglected communities?
TRUMPERNOMICS FOR THE
RICH…. and his parasitic family!
Report:
Trump Says He Doesn't Care About the National Debt Because the Crisis Will Hit
After He's Gone
"Trump's
alleged comment is maddening and disheartening,
but at least he's being straightforward about his indefensible
and self-serving neglect. I'll leave you with this reminder of the scope of the problem, not that anyone in power is going to do a damn thing about it."
but at least he's being straightforward about his indefensible
and self-serving neglect. I'll leave you with this reminder of the scope of the problem, not that anyone in power is going to do a damn thing about it."
TRUMPERNOMICS:
THE SUPER RICH APPLAUD
TWITTER’S TRUMP’S TAX CUTS FOR THE SUPER RICH!
"The tax overhaul would mean an unprecedented windfall for the
super-rich, on top
of the fact that virtually all income gains during the period of
the supposed
recovery from the financial crash of 2008 have gone to the top 1
percent income
bracket."
“The undermining of the I.R.S.’s enforcement capability coincides
nicely with the Republican playbook: Enrich wealthy individuals and
corporations with tax giveaways that balloon the deficit, justifying spending
cuts for health care, education and infrastructure, then amplify the process by
not holding high-end taxpayers accountable for the amounts they owe.”
A Gutted I.R.S. Makes the Rich Richer
With
enforcement enfeebled, as much as 20 percent of potential tax revenues go
uncollected.
By The
Editorial Board
The editorial board represents the opinions of the board, its
editor and the publisher. It is separate from the newsroom and the Op-Ed
section.
Let’s take a moment to pity the Internal Revenue Service.
Yes, to many Americans, it’s a money-grabbing ogre siphoning hard-earned cash
to the faceless federal bureaucracy.
But the nation’s tax collector today is an enfeebled
enforcer. Its budget has been bled dry by a Republican Congress in service to
wealthy donors and businesses aggressively pursuing tax avoidance, leaving
uncollected 18 percent to 20 percent of potential tax revenues annually. That’s
the conclusion in articles by the journalism site ProPublica, co-published by
The Atlantic and The Times.
Loopholes are beyond the means of most Americans who earn
salaries or are paid hourly wages, and are exploited by those who derive
significant income from investments or business revenue. Although we’d all like
to pay less, relative to most developed nations our tax burden is a pretty good
deal.
It’s an even better deal for the richest Americans, who have
benefited the most from President Trump’s tax cuts. The rich are different:
They’re more likely to cheat, according to one study of I.R.S. data. And the
I.R.S. has about as many auditors now as it did 60 years ago, when there were
half as many Americans. The undermining of the I.R.S.’s enforcement capability
coincides nicely with the Republican playbook: Enrich wealthy individuals and
corporations with tax giveaways that balloon the deficit, justifying spending
cuts for health care, education and infrastructure, then amplify the process by
not holding high-end taxpayers accountable for the amounts they owe.
Dodging taxes is as old as taxes themselves. Just ask Mr.
Trump, who has employed systematic dodging for decades, according to a Times
investigation.
We got a good look at one of the bigger problems, the
proclivity of the wealthy to hide cash from the I.R.S., in 2008, when the
Justice Department was able to pierce the Swiss bank secrecy veil during an
investigation of UBS. The department uncovered thousands of rich Americans who
were hiding about $18 billion in offshore accounts arranged by that Swiss bank.
Many were compelled to fess up and pay up. But eight years later, the Panama
Papers, millions of files hacked from a Panamanian law firm that specialized in
caching money for the rich and powerful, disclosed that there were still plenty
of rich people willing to play hide-and-seek with the I.R.S.
The odds are in their favor, and growing. ProPublica reported
that I.R.S. audits dropped 42 percent from 2010 to 2017, a period in which the
I.R.S. budget was lopped by $2.5 billion, adjusted for inflation. New
investigations of people who don’t file dropped to 362,000 last year, from 2.4
million in 2011. That costs the Treasury $3 billion annually in uncollected
taxes. More than $8 billion in back taxes did not get collected in 2017 because
the agency couldn’t get to them before the 10-year statute of limitations ran
out, another worsening problem. Tax delinquents can simply wait the agency out.
ProPublica estimated the total shortfall of uncollected funds since 2011 at $95
billion.
These uncollected billions could pay for any number of
things: better care of wounded veterans, infrastructure improvements such as a
desperately needed new tunnel between New York and New Jersey. You could even
build an expensive wall.
One area where the I.R.S. still bares its teeth is in
auditing people in the lowest tax bracket. If you are claiming the
earned-income tax credit, which provides cash for people who typically earn
less than $20,000 annually, you are as likely to be audited as someone earning
between $500,000 and $1 million. ProPublica reported that 36 percent of all
I.R.S. audits focused on this group. It may not be a crime to be poor in the
G.O.P.’s America, but you can expect to be treated like a criminal for
accepting the government’s cash to make ends meet. At best, that’s an
inefficient use of I.R.S. agents: Compliance should apply to all, but the I.R.S.
should do most of its fishing where the big fish are.
The Trump/G.O.P. tax policy is now operating at peak failure.
The tax cuts have failed to increase gross domestic product beyond the “sugar
high” stimulus they gave to an economy already heading toward record low
unemployment. The economy seems to be slowing, making a mockery of the promise
of strong growth that was used to peddle the tax cuts.
The stock market is shuddering at the idea of a slowdown,
which corporations contributed to by using their tax windfall to buy back more
than $1 trillion of their own stock. They have, to this point, immolated
capital instead of using it for additional hiring, increased wages or further
business investments.
A CNBC poll found that millionaires are still sanguine about
the economy. They can well afford to be. If their stocks lose value, they can
take a write-off. If stocks rise, their maximum long-term capital gains tax is
only 20 percent. Most American households don’t own stocks — or no longer own
them, having been forced to liquidate stock holdings in the Great Recession,
which was precipitated by a collapse in the housing market. Thus the wealth gap
grows, reaching levels not seen since the Roaring Twenties.
To pay for the millionaire tax cuts, sacrifices had to be
made. So Congress limited deductions for state and local taxes to $10,000
annually. While that generally applies to well-to-do people who can itemize
their tax returns, it was also a clear shot against blue states such as
California and New York that have relatively high state and local taxes. But
reducing these deductions, along with higher interest rates, punished the
housing market, which is stagnant nationally and in a free fall in the Northeast.
Our ability to keep the $1 trillion deficit created by the
Trump tax cuts from deepening depends in part on collecting taxes to which the
government is legally entitled.
Think of it this way: To protect our nation, we have the most
powerful army in the world. To protect our tax base, we have an army on the
order of Liechtenstein’s.
The lack of
deterrence will only encourage more cheating. The I.R.S. needs to be capable of
doing the job for which it was created — from answering taxpayers’ questions to
chasing down the richest cheats, even if they occupy the Oval Office
SWAMP KEEPER TRUMP’S BIGGEST DEAL EVER:
Saving the 9-11 invading Saudis’ arses!
https://mexicanoccupation.blogspot.com/2018/11/mike-lee-swamp-keeper-trump-and-his.html
"I doubt that
Trump understands -- or cares about -- what message he's sending. Wealthy
Saudis, including members of the extended royal family, have been his patrons
for years, buying his distressed properties when he needed money.
“The Wahhabis finance thousands of madrassahs
throughout the world where young boys are brainwashed into becoming fanatical
foot-soldiers for the petrodollar-flush Saudis and other emirs of the Persian
Gulf.” AMIL IMANI
I
recommend that Ignatius read Raymond Ibrahim's outstanding book Sword
and Scimitar, which
contains accounts of dynastic succession in the Muslim monarchies of the Middle
East, where standard operating procedure for a new monarch on the death of his
father was to strangle all his brothers. Yes, it's
awful. But it has been happening for a very long
time. And it's not going to change quickly, no matter how outraged
we pretend to be. MONICA SHOWALTER
*
“You saved my a rse again and again… So, I’ll save yours like
Bush and Obama did!
WHO IS FINANCING ALL THE TRUMP AND
SON-IN-LAW’S REFINANCING SCAMS???
FOLLOW THE MONEY!
"I doubt that
Trump understands -- or cares about -- what message he's sending. Wealthy
Saudis, including members of the extended royal family, have been his patrons
for years, buying his distressed properties when he needed money. In the early
1990s, a Saudi prince purchased Trump's flashy yacht so that the
then-struggling businessman could come up with cash to stave off personal
bankruptcy, and later, the prince bought a share of the Plaza Hotel, one of
Trump's many business deals gone bad. Trump also sold an entire floor of his
landmark Trump Tower condominium to the Saudi government in 2001."
“The Wahhabis finance thousands of madrassahs
throughout the world where young boys are brainwashed into becoming fanatical
foot-soldiers for the petrodollar-flush Saudis and other emirs of the Persian
Gulf.” AMIL IMANI
I recommend that Ignatius read Raymond
Ibrahim's outstanding book Sword
and Scimitar, which
contains accounts of dynastic succession in the Muslim monarchies of the Middle
East, where standard operating procedure for a new monarch on the death of his
father was to strangle all his brothers. Yes, it's
awful. But it has been happening for a very long
time. And it's not going to change quickly, no matter how outraged
we pretend to be. MONICA SHOWALTER
Swamp Keeper Trump
prepares for the inevitable move to impeach him and ask for asylum in Scotland.
Fox News host Tucker Carlson said in an interview Thursday
that President Donald Trump has succeeded as a conversation starter but has
failed to keep his most important campaign promises.
“His chief promises were
that he would build the wall, de-fund Planned Parenthood, and repeal Obamacare,
and he hasn’t done any of those things,” Carlson told Urs Gehriger of the Swiss weekly Die Weltwoche.
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