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    5 Aug 2016

    How the Trumps Got Rich: The Trump fortune was built off theft — from workers, from the state, and from the commons.

    Most Americans know Republican presidential candidate Donald Trump as a reality television star and a celebrity endorser. But in his home state of New York, he has a different reputation: he’s a real estate shmuck.
    Trump inherited his business — which consists of gilded and glassed condos, clubs, casinos, office towers, hotels, and golf courses throughout New York City and beyond — from his father, Fred Trump. Like the Dursts, Rudins, Zeckendorfs, and LeFraks, the older Trump ran a family-based real estate empire.
    Though these families still exert a great deal of power in New York City development politics, they are beginning to be outpaced by new corporate real estate titans — like Extell, Vornado, Related, BlackRock, and others — that use global investment capital to build glitzy new developments and buy out old affordable complexes. Donald Trump bridges these two modes, combining family business with corporate kitsch.
    From a capitalist perspective, Trump is a hardworking — if obnoxious — businessman: he inherited money from his father and made it grow. From a socialist point of view, however, he got his wealth by very different means: theft.
    Ruth Wilson Gilmore argues that America’s richest families possess “twice stolen wealth – (a) profit sheltered from (b) taxes.” But in fact, Trump’s fortune is triply stolen by wage theft from the workers who build and maintain his projects; tax theft from the state that enables him; and land theft from the common spaces he encloses. While he extolls the benefits of private enterprise, Trump really got rich off public resources.
    His behavior is by no means unique: all capitalists profit from worker exploitation; just about all corporations try to avoid taxes in one way or another; and in a settler state, all land is stolen. But as usual, Trump embodies the most exaggerated version of a rotten system.

    Stolen Wages

    Donald Trump’s real estate business is premised on profit off of the labor of thousands of workers in construction, maintenance, and services. Each paycheck to each worker represents a small theft, the deduction of a portion of that worker’s compensation for their bosses’ profits. But Trump has built on these everyday pilfers, increasing his fortune through straightforward wage theft.
    In 1980, he had assembled the lots and permits to start his biggest development, Midtown Manhattan’s Trump Tower. First, his company had to demolish the asbestos-laden department store that occupied the lot. Trump’s contractor hired two hundred undocumented Polish workers to do the job for under $5 an hour.
    They worked twelve hours a day, seven days a week, with no overtime pay. Many of them were not even paid all of their paltry wages, and some did not get paid at all. They sued the contractor and Trump; Trump stalled and denied, until finally settling sixteen years later.
    Trump pulled a similar stunt at the Trump SoHo, a mixed condo-hotel development completed in 2010. The project was plagued by controversy, including the tragic death of Yutiy Vanchytsky, a Ukrainian immigrant who fell from a poorly constructed scaffold while smoothing concrete on the forty-second floor.
    Once the project was up and running, Trump’s operation began stealing wages from the service workers maintaining the hotel. When customers booked catered events, they were charged a 22 percent service fee; but none of that money went to his underpaid staff, who filed a class-action lawsuit in March demanding back pay.
    Trump has pulled these heists not only on construction and service workers, but also professional clients. He hired Andrew Tesoro, a New York City architect, to design Trump National Golf Club in New York’s Westchester suburbs. While Trump was satisfied with Tesoro’s work, he nonetheless underpaid the architect by thousands of dollars. Tesoro is now telling his story in videos for the Clinton campaign (which has been hit by its own accusations of unpaid contracts and intern exploitation).
    If we look beyond Trump’s employees and include his customers, the profits he’s earned through theft grows exponentially. From the rent-regulated tenantshe tried to evict to the working-class people he swindled into enrolling at “Trump University,” the Republican candidate has made a fortune taking other peoples’ wages, savings, and time.

    Stolen Taxes

    Throughout his career, Donald Trump has adeptly dodged taxes and gathered subsidies. In this way, he has not only shorted the public, but also depleted budgets for socially beneficial programs.
    The practice began with the money passed down from his father. Fred Trump excelled at getting public subsidies and tax abatements, allowing him to amass quite a fortune. While his son claims that his business started with a $1 million loan from his father, this isn’t entirely factual. Fred Trump had established million-dollar tax-sheltered trusts for each of his children and grandchildren, and, according to the Washington Post, Donald made
    $19,000 in 1977, $47,200 in 1978, $70,000 in 1979, $90,000 in 1980, and $214,605 in 1981. Trump also received about $12,000 a year from a 1949 trust set up by his father and nearly $2,000 a year from another 1949 trust created by his grandmother. He also received a $6,000 gift every December from his parents.
    Trump’s father didn’t give him a loan, he provided a reliable source of income that increased every year. Then, when Fred Trump died, Donald received anestimated $40 million from his $250 million estate.
    Donald Trump’s first big break came with the opportunity to buy and renovate the Commodore Hotel in 1980. In the process of turning it into the Grand Hyatt Hotel, he tore down the building’s landmarked sculptures, wrapped the façade in glass, and quietly demolished what he was supposed to preserve. Thanks to his father’s history of making large donations to city officials, Trump received a forty-year tax exemption from the Urban Development Corporation — double the standard, and the first of its kind. To this day, he pays no state taxes on the luxury hotel.
    When he began building Trump Tower, he applied to New York City’s Department of Housing Preservation and Development (HPD) for a $20 million tax break. Mayor Koch’s HPD commissioner, Anthony Gliedman, denied the application.
    But Trump sued and won, and the city was ordered to grant the abatement in full. Three years later, Gliedman went to work for Trump, advising him on future government negotiations. In 2004, the New York City Economic Development Corporation granted Trump an additional twelve-year abatement on the commercial portion of the Trump Tower — a $164 million tax break on a property worth $237 million.
    As his business grew, Trump began consolidating his corporations and LLCs to a single address. The fictional companies that own 40 Wall Street, Trump Carousel Central Park, and almost four hundred other Trump businesses are not registered to his New York City headquarters, but to one sleepy office building in Delaware, America’s onshore tax haven. (Hillary Clinton uses the exact same building for her corporate registrations.)
    On top of tax breaks, Trump has finagled a number of city and state subsidies. His Bronx golf course — which sits in the middle of a public park in New York’s poorest borough — is only the most recent example. The city paid $230 million to clean up the site and develop the course; Trump was only responsible for building the clubhouse and managing the park.
    Yet public subsidies allow Trump to pay no rent for the first four years of his twenty-year lease; in year five he will pay 7 percent of the rent, and in year ten he will pay 10 percent. In the meantime, New York City residents are covering his water and sewer bills to the cost of roughly $1 million per year. None of the nearby affordable housing complexes have subsidies anywhere near as generous.
    Trump also manages to avoid paying taxes on his residence. His Manhattan apartment receives an abatement to the tune of $20,493 a year, including a small credit from the New York State School Tax Relief Program (even though that program has an income cap of $500,000).
    The problem with Trump’s tax avoidance is not just that he — like many rich people — pays less than the rest of us; it is that taxation is one of the ways society reclaims what capitalists take from workers. By avoiding taxes while simultaneously winning subsidies, Trump adds a second and more generalized layer of theft to his business model.

    Stolen Land

    Expropriating land is another practice Donald learned from his father. An important part of Fred Trump’s business model was “urban renewal.” This program allowed the government to seize and clear property using eminent domain, then turn the land over to sponsors for new developments.
    To complete Fred’s largest project — Trump Village on Coney Island — the state had to evict almost one thousand families, many of them African American. The land was actually reserved for a union-run housing project, but Fred used his political benefactors to block that development until the city gave him half the land and a lucrative tax break.
    Nearby, the Klan sympathizer built Beach Haven Apartments, the segregated development where Woody Guthrie wrote the song “Old Man Trump.” (“I suppose old man Trump knows just how much racial hate he stirred up in the bloodpot of human hearts when he drawed that color line here at his eighteen hundred family project.”) This is Donald Trump’s inheritance.
    The younger Trump tried his hand at eminent domain, but without much success. He famously attempted to remove an elderly homeowner from her Atlantic City house in order to build a parking lot, but the courts stopped him. Around the same time he tried a similar scheme in Bridgeport, Connecticut, where he hoped to evict five businesses in order to build a waterfront tourism complex. Once again, he botched the approval processes.
    Though he failed at stealing private land, Trump has become quite good at privatizing public space. In the most famous incident, he seized the Central Park ice-skating rink. The rink had been closed from 1980 to 1986, following a disastrous (if well-intentioned) experiment in alternative energy. The ice would not freeze, causing a major headache for Mayor Koch, who finally went to the Board of Estimates — now known as the City Council — with a plan to fix it.
    Still stinging from the Koch administration’s initial denial of his Trump Tower tax abatement, Trump jumped at the opportunity to humiliate the mayor. According to Koch political biographer Jonathan Soffer, “A keen neoliberal, [Donald Trump] also saw a way to communicate an ideological message, that the private sector was more efficient than government, and offered to take charge of rebuilding the rink.” Once again leaning on his father’s political connections, he convinced the Board to deny Koch’s plan, and instead to fund his company to do virtually the same thing, in the same time frame, and for the same amount of money.
    Garnering favors from contractors who wanted to work on future Trump projects and benefiting from the oversight of former Koch administration member Gliedman, Trump completed the renovation in just five months.
    His successful political cronyism became a case study in free-market triumphalism, and, in historian Joshua Freeman’s telling, “the media hailed him as the embodiment of one of the lessons of the [1975 New York City] fiscal crisis: let the genius of private enterprise replace the morass of government bureaucracy.” The rink now operates as a private concession within the park and contributes to Trump’s enormous wealth.
    Trump’s more recent Bronx golf course acquisition is an even greater case of public land theft. The city acquired the site — the east side of Ferry Point Park — in 1937 to build the Whitestone Bridge. For decades this section of the park was used as a garbage dump, but Mayor Bloomberg’s Parks Department undertook a massive renovation to turn it into a usable public space.
    After spending millions on cleanup, the Bloomberg administration turned most of the park over to Trump. The city has kept less than ten acres of shabby “community park” space, and Trump’s 222-acre golf course thoroughly dominates the landscape. To use the facility, Trump charges $141 for weekdays, and $169 for weekends — far more than Parks Department–run golf courses. In just its first year, it has made $8 million for Trump.
    In addition to parkland, Trump has tried to privatize the public space at the base of Trump Tower. The atrium came out of a 1961 citywide rezoning, which created a property class of “privately owned public spaces.” The program permitted developers to build above zoning limits as long as they provided open space for the public, either inside or outside of their buildings.
    The most famous such space is Zuccotti Park, once home to Occupy Wall Street.
    By making the Trump Tower lobby fully accessible to the public, Trump was allowed to build an additional twenty stories — worth roughly $530 million — atop his skyscraper.
    Trump recently rendered the space virtually unusable, however, by replacing its twenty-two-foot long marble bench with a kiosk that sells Trump campaign materials and Apprentice merchandise. The city has fined Trump $14,000, but the atrium has not been restored. Meanwhile, those twenty bonus stories keepgenerating rent.
    Trump’s success depends on the claim that he can run these spaces more efficiently and effectively than any public authority. His public-private partnerships, however, only succeed at making public spaces effectively private: they are only open to paying customers. While his argument may be bankrupt, it has helped make him a billionaire.

    “How Real Estate Came to Own Us”

    Trump insists that he is a self-made man. Of course, he is not: his wealth came from his father’s theft of labor, taxes, and land. Donald Trump has perfected these methods and accumulated even more wealth. His — and his father’s — success has depended on an ability to convince first public officials and now the general public that they are better for being robbed. This is the real estate schmuck’s ideology: what’s good for them is good for you, so you should let them profit by pilfering public assets and leeching off workers.
    Trump’s political ascension can be explained as his “state capitalist” ideology taking over national politics. In truth, though, the relation is reversed: Donald Trump rose only after his class won a war to undo the postwar consensus.
    Take the 2008 financial crisis. Typically, commentators connect the subprime crisis to Trump’s presidential nomination by pointing out that recession-induced unemployment made Trump’s dog-whistle promise to “make America great again” especially seductive. This is certainly true, but it ignores the cause of the 2008 crisis: a financialized real estate industry bought the country, crashed it into a ditch, and then used public financing to reestablish their business model. As the subtitle of Alyssa Katz’s book attests, the 2008 crisis showed “how real estate came to own us.”
    Now real estate — embodied by Trump — is trying to rule us as well. His campaign has garnered the industry’s support, from the old real estate families to the new corporate conglomerates. His supporters — and the candidate himself — laud his experience stealing wages, taxes, and land as proof of his business savvy and vaunted deal-making skills. The United States is obsessed with real estate — from reality shows documenting the purchaserenovation, and sale of homes to growth machine politics, which equate rising property values with generalized prosperity — and Donald Trump is its candidate.
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