“He Pays Less, We Pay More”: Donald Trump’s Worthless Real Estate Math
“He Pays Less, We Pay More”: Donald Trump’s Worthless Real Estate Math
Donald Trump’s presidential campaign disclosure reports declare that his buildings are worth a lot of money, in his view demonstrating phenomenal business acumen and how the Trump name adds luster. But in property tax filings Trump describes the same properties as almost worthless, asserting one of his biggest properties is in such an awful location that its retail space is unrentable—what he’d probably define as a loser.
There are multiple lessons in the different faces Trump presents to voters and tax officials that shine a light on Trump’s character and conduct. There are also lessons for you if you own a home or other real property—or plan to someday—because when big property owners pay less, more of the burden falls on you.
Consider first the Trump National Golf Club Westchester, located roughly 33 miles north of Trump Tower in Manhattan. It features a 50,000 square foot, $20 million clubhouse that Trump built after he acquired the 140 acres in the late 1990s. There are 18 holes and a majestic waterfall that Trump says is 101 feet high. Trump boasts that “no expense was spared” in creating a “world class” golf course.
It is located in Briarcliff Manor village, a tony Manhattan suburb where half the homes are valued at more than $700,000, according to town assessor Fernando Gonzalez. Houses listed for sale at that price typically are between 2,200 and 3,700 square feet and sit on a fraction of an acre.
In his presidential disclosure Trump valued the golf course and its massive clubhouse at more than $50 million. In tax documents Trump valued the same property at just $1.35 million.
That is a 97% variance, an irreconcilable difference that raises yet again questions about Trump’s integrity, not to mention the size of his fortune, which he has testified he values differently as his emotional state shifts , regardless of objective facts.
Trump’s presidential disclosure indicates he made $10.3 million off the golf course last year and early this year. That alone should sound alarms since businesses normally sell for multiples of their profits, not a tiny fraction of profits.
A Tale of Two Numbers
This was no one-time error. Throughout his career Trump has filed official government documents that place wildly different values on properties, presenting high values to bankers, investors and the public and small numbers to tax authorities and others, such as contractors and vendors seeking payment for work they performed. He has been accused of dishonest conduct and using mismatching financial data again and again by government auditors, bankers and investors, though he negotiated civil settlements in every case, many on terms kept secret because judges sealed the files.
In mid-May, when Brian Ross, chief investigative correspondent for ABC News, was about to air two reports about the vast difference in valuations—reports in which I was featured as a tax expert— Trump upped the golf course value for tax purposes to $9 million .
While that‘s more than six times Trump’s original figure, it is also at least 82% less than what he declared was “true, complete and correct” in his campaign disclosure filing, which declared the golf course is worth north of $50 million.
Understanding Property Valuation
Modest differences in property values are routine. It’s best to think of real estate as falling within a range of values, but not a range with a top that is more than 37 times the bottom.
As someone who writes about taxes, I decided a few years ago to challenge the re-assessment on my home a few blocks outside Rochester, N.Y. I thought the assessment was higher than the market value of my home. I also wanted to experience the appeals process to understand it. The town and I differed by $30,000, or 9%. The town lowered my assessment by $20,000 or 6% after looking at comparable sales in my neighborhood. That’s the kind of range assessors from New York to California tell me is common in appeals: single digits, not 97.3% or even 82%.
Keep in mind as you read this that the original federal levy, more than two centuries ago, was a property tax. Every farm and workshop in the original 13 states was assessed based on its size and the crops or products it could produce. The property tax is levied at the local and state level.
You might think that after 220 years of experience, taxing real estate would be based on objective measures using hard data. You might think that, but as Trump knows well, the system is easily manipulated to shift the tax burden off grand properties and onto those whose estates are not so well endowed.
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Trump wants the people in the town where his 50 million dollar golf course is located to pay more in property tax so he can pay less.