On July 1, the Manhattan district attorney’s office charged the Trump Organization and Chief Financial Officer Allen Weisselberg with multiple counts of tax fraud, grand larceny, conspiracy and falsifying business records. The criminal indictment alleged that since 2005, Weisselberg (who made $940,000 a year in salary and bonus) did not declare $1.7 million in “off the books” fringe benefits to the IRS, including $1.17 million in rent on an apartment in Manhattan; $360,000 in private school tuition for his grandchildren (with checks reportedly signed by Donald Trump himself); $200,000 for leases on a Mercedes Benz; and a flat-screen television, carpet installation and furniture for his home in Florida. To evade New York City taxes, the indictment alleges that Weisselberg also claimed, falsely, that his primary residence was outside Manhattan.
Prosecutors estimate that Weisselberg evaded $556,00 in federal taxes, $106,000 in state taxes and $238,000 in New York City taxes.
According to the indictment, the Trump Organization recorded the perks in internal spreadsheets but did not include disbursements to Weisselberg in its annual IRS filings or pay payroll taxes on them. Investigators in the offices of District Attorney Cyrus Vance Jr. and New York Attorney General Letitia James are continuing to look into whether the Trump Organization also fraudulently manipulated property values to obtain more favorable bank loans and reduce its tax obligations.
Trump, who bragged in 2017 that he knew “the details of taxes better than anybody, better than the greatest CPA,” is now singing a different tune. “They go after good hard-working people for not paying taxes on a company car,” he declared at a rally in Sarasota, Fla., on July 3. “You used an apartment because you need an apartment because you have to travel too far where your house is. You didn’t pay tax. … Or education for your grandchildren. I don’t even know. Do you have to? Does anybody know the answer to that stuff?”
These developments would seem to illuminate what many former students at Trump University already know: The Trump Organization appears to be a corrupt enterprise. But there’s a more important takeaway: There is no better place than Trump’s America to be a white-collar criminal. To preserve our prosperity and any chance of achieving equal justice under the law for all Americans, it is urgently necessary that we stop subsidizing the wealthy and telling everyone else to fend for themselves.
Following substantial cuts in the enforcement division of the IRS by a Republican-controlled Congress, federal white-collar prosecutions reached an all-time low in January 2020 (with data reaching back 35 years). According to a study by the Brookings Institution, one out of every six dollars owed in federal taxes is not now paid, an amount about three-quarters of the pre-pandemic annual federal budget.
Millionaires are 80 percent less likely to be audited than they were a decade ago. Since the tax returns of poor people are relatively easy to analyze electronically, they are now as likely to be audited as individuals whose income is in the top 1 percent. And criminal referrals by the IRS are down 25 percent from 2010.
In 2019, according to one estimate, uncollected revenues amounted to $554 billion. IRS Commissioner Charles Rettig recently indicated the shortfall may be as much as $1 trillion. To close the gap, the Biden administration has proposed adding 87,000 staff to the IRS tasked with enforcing existing laws and conducting audits of wealthy individuals and large businesses. The administration projects that the initiative, which will be implemented over a 10-year period and includes more stringent reporting requirements for financial institutions, will add $300 billion to the U.S. Treasury.
If adopted, the Biden plan might send a signal to wealthy Americans that they must pay their fair share. And, who knows, a conviction of Allen Weisselberg and the Trump Organization (on these or subsequent charges) might convince some working-class and middle-class voters (whose lifetime earnings will never reach $1.7 million) that when Donald Trump saluted them as “the backbone and heartbeat of our country” and promised that “in a rigged system, I will take on your enemies,” the carnival barker from Queens was selling them a bill of goods and laughing all the way to the bank.
Glenn C. Altschuler is the Thomas and Dorothy Litwin Professor of American Studies at Cornell University. He is the co-author (with Stuart Blumin) of “Rude Republic: Americans and Their Politics in the Nineteenth Century.”