Trump's Real Estate Taxes, the Supreme Court, and Climate Change Are All Related (That's a Good Thing)


It’s only been a week since the New York Times published an article about Trump’s prolific tax cheating with his father’s real estate fortune, but it’s fallen out of the news. That’s not surprising given the complexity of the story and the baked-in awareness that Donald Trump was/is not an honest businessman. It’s also nowhere near being the most important national story given the ugly Kavanaugh confirmation debacle and the dire UN climate change report. That doesn’t mean it isn’t important. In fact, all three stories are deeply related.

To put it broadly, without radically changing our real estate laws, we can not save our country from climate change and to change our laws that radically, they will need to pass through the Supreme Court eventually. 

As of today, both seem like a daunting if not impossible tasks. The Supreme Court is set up to spend the next generation turning us back to the 19th century. The entire conservative movement over the last 40 years has worked to empower a judicial philosophy that is openly hostile to popular democratic governance and legislative oversight of the economy. And they just locked in power for next 40. 

On top of that, real estate has long been one of the most privileged industries and asset classes in America. That makes it deeply small-c conservative and has given it a powerful set of tools and incentives to prevent major reform, whether on its tax policy, its relationship to political contributions, or its environmental impact. 

These interests have lots of lobbying power at the national level, but their true power is on the state and local levels. They block candidates and policy initiatives that are perceived to “threaten” property values and are the main barrier to reforming land-use policy around economic and environmental justice. Overcoming that structure is extremely challenging.

But before you despair, let’s consider why the Trump tax cheat story is so important: it offers a hack into changing all of this. 

To defeat President Trump or the Republican Party, we must defeat Real Estate Developer Donald Trump.

To quickly recap, the Times story poured over thousands of court and tax documents and spoke with hundreds of people associated with the Trump Organization and family to reveal three fundamental facts: 

  • Donald Trump didn’t build his real estate empire like he claims, he illegally inherited it from his father. 

  • Fred Trump, the father, built most of that empire through gaming the federal government for millions in tax subsidies. 

  • Father and son committed systemic tax fraud over decades that directly harmed tenants

All of this happened by aggressively exploiting the already favorable tax code that allows real estate developers to self-assess lower property values for tax purposes, to arbitrarily split management structures to hide profits while overcharging vendors and tenants, and to shield ownership through obscure legal entities to further dwindle tax liabilities. 

The bad news is that, at this stage, it seems likely that the Trump family has already gotten away with it (although New York is looking into it). Most (but definitely not all) of these moves are perfectly legal given how the real estate lobby has helped write the tax code at the local and federal level for decades. That’s true in every state.

This is largely because a tiny fraction of the population, like the Trump family, has an immense amount of the wealth generated over the last few decades and as a result has captured almost all of the political power. Real estate money is the foundation of this power structure and always has been. Who owns the land is the very basis of power in America, which both Republicans and Democrats have protected. 

When then-candidate Trump bragged about giving money to both parties, this is basically what he was bragging about. Almost every big real estate interest is like that. 

The Trump tax cheating story then is incredibly useful as a rallying cry for real estate reform because it is a shorthand to explain how damaging real estate law is in the US and it is also a roadmap for how to change it. 

That’s where the good news comes in: we are already starting to dismantle this power structure. 

In New York, the Democratic primary on Sept 13th saw a slate of progressive pro-tenant candidates defeat real-estate backed candidates, potentially shifting the balance of power in Albany for the first time in generations. Their victories were backed by a growing bottom-up coalition for universal rent control that has a real shot of removing the type of legal loopholes that the Trumps used to jack up rents and avoid taxes for decades.

If Democrats take the senate in Albany next month, there is a real chance that a once-in-a-generation reform movement can take hold in Albany. Universal rent control should start with issues related to rents of course, but it should expand to address all of the background mechanics of real estate tax law and political contributions that have fed this unjust system for decades. 

This coalition is gaining power as a popular response to the affordable housing crisis and has a real plan to address it. But just as importantly it is also helping people begin to see that the affordable housing crisis is part of a larger inequality crisis across our late capitalist society. The environmental destruction ravaging our planet is a logical outcome.

There are few, if any, states that aren’t subject to the toxic mix of shadowy real estate law and shadowy political contributions from real estate. Without removing their hold on power, we will never be able to make the changes we need to protect the environment in the long-term and protect the must vulnerable populations in the short-term. 

Even if that happens, the real estate interests profiting from this power structure will inevitably look to the Supreme Court to protect it. 

Anti-union, pro-voter suppression, and generally skeptical of the administrative state, the current court, now with Kavanaugh confirmed, looks set up to bail out “Big Real Estate” (or maybe the more Georgist “Big Land”?) But on closer look, they shouldn’t be so sure.

The Supreme Court famously does not have the power of the purse or the sword. It is a deliberative body that interprets laws, which is inherently a subjective process (which so-called “originalists” prove in action). It’s credibility as a separate, legitimate third branch of government has always rested on its popular support regardless of any rhetoric suggesting otherwise. It can get away with being out of step with the majority of people for only so long.

Senate Majority Leader Mitch McConnell doesn’t need to worry about that. Blocking Judge Merrick Garland and now jamming through Brett Kavanaugh has severely damaged the court’s image as a non-partisan institution, but Republicans will be rewarded by their donor class for it. (Their base may get some short-term victory on further restricting abortion access, but it will pale in comparison to the losses they suffer in the long-run from the conservative movement’s real priorities). 

Chief Justice Roberts does need to worry about the Court’s image. It’s one thing to strike down EPA restrictions on (flimsy) grounds of federal overreach, but it’s entirely another to strike down direct laws passed by state legislatures. There is at least some evidence that Chief Justice Roberts understands that blindly delivering partisan victories for conservatives is bad for the health of the court, and, perhaps generously, for the country. Overturning popularly supported state laws even if they are counter to prevailing a la carte conservative judicial theory seems unlikely. There is hope, at least.

But even getting in front of the Supreme Court starts with getting laws passed at the state level. That will take building broad coalitions across and within states that agree on a narrow set of legislative priorities that can get them passed. 

I believe that real estate reform is the perfect issue to kindle the formation of these coalitions. The power of developers and landowners over our politics has crippled our democracy, long before its crippled our ability to face climate change. There are immediate and well-defined legislative goals that can be achieved to break that structure. 

The progress made on electing candidates in the New York Senate that support universal rent control is a great start. There is much to be done from there. But if we can create a model for passing progressive laws on real estate reform, we can do so for climate change. 

It starts with telling a simple story to as many people as possible. We have one now. Showing how Real Estate Developer Trump has harmed New Yorkers both as a landlord and a political contributor is a powerful way to start dismantling the system that created President Trump, the plutocrat supporting, climate-change denier. 

 (market watch/ getty images)

(market watch/ getty images)