Offshore island tax havens, crafted by creative accountants for use in places like the Cayman Islands and Bermuda, long ago became infamous for enabling multi-millionaires to avoid paying Uncle Sam as much in income taxes as you do.
So sharp-eyed IRS auditors became equally infamous for getting tough on the scheming tax avoiders.
But Jared Kushner, President Donald Trump’s 33-year-old son-in-law and senior White House adviser — whose family real estate company has gifted him with a net worth of almost $324 million — apparently found himself an offshore island that’s still ripe for a tax boondoggle. It’s an island called Manhattan.
Sunday’s New York Times revealed Kushner’s clever, and apparently quite legal, accomplishment with a terrific investigative front page report by correspondents Jesse Drucker and Emily Flitter, headlined: “Forms Suggest Kushner Paid Tax Bills of $0.”
The article reported that Kushner had actually made millions in annual income from his family’s Kushner Companies, but had utilized a method of creating losses that existed on paper only, according to Kushner financial documents covering the years 2009 through 2016 that had been prepared for a proposed project. His company’s prime building is 666 Fifth Avenue, in Manhattan.
“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,” the Times reported. “But the losses were only on paper – Mr. Kushner and his company did not appear to actually lose any money.”
Kushner would take deductions for “depreciation,” a provision that permits real estate developers to deduct “a portion of the cost of their buildings” from each year’s taxable income, the article said. For example, in 2015, Kushner received $1.7 million in salary and investment income — and listed losses (mainly depreciation) of $8.3 million.
Last year, Trump’s White House pushed through “a sweeping revision of the nation’s tax laws that expanded many of the benefits enjoyed by real estate investors. Allowing them to reap even larger deductions,” the Times reported. Based upon the documents the reporters reviewed, and interviews with tax experts, the Times concluded that it was likely Kushner had paid no income taxes for years — and it was all apparently legal.
Time out. This just is not the way our world should work. Indeed, it takes me back to strikingly similar outrage I grappled with as a young Newsday correspondent covering Richard Nixon’s presidency. Nixon had paid virtually no income taxes because he had taken a deduction for having donated his pre-presidential papers. I finally found a way to raise what I thought was then — and still is today! — the real outrage. At a prime-time night press conference in the East Room, here’s what I asked Nixon:
“Mr. President, ... April 21, 1969, was a significant day for you in taxes and for the country, too. That is the notary date on the deed that allowed you to give your papers to the Government and pay just token taxes for two years. On that same date, you had a tax reform message in which you said, and I quote: ‘Special preferences in the law permit far too many Americans to pay less than their fair share of taxes. Too many others bear too much of the tax burden.’ Now, Mr. President, do you think you paid your fair share of taxes?”
What happened next was that Nixon never answered the question. Then again, I didn’t expect him to — the only obvious answer is that of course he didn’t pay his fair share. Instead, Nixon said that he took that deduction at the urging of his predecessor, Lyndon Johnson (who was then conveniently dead). Nixon then named three famous liberals who had taken the same deduction; and that too became a problem for the president, because it is illegal for a federal official to publicly divulge information from confidential tax returns.
Nixon didn’t pay his fair share then. Multimillionaire Kushner didn’t pay his fair share now. And Nixon and I (allies just this once!) want you to know that it’s way past time for us to fix those “special preferences” that are still permitting “far too many Americans from paying their fair share of taxes.”
(Martin Schram, an op-ed columnist for Tribune News Service, is a veteran Washington journalist, author and TV documentary executive.)