The first presidential debate between President Donald Trump and former Vice President Joe Biden airs tonight and will focus on the coronavirus pandemic, the economy, racial unrest, and the candidates’ records among other preselected topics.
But given Trump and Biden’s shared penchant for off-the-cuff remarks, will they stay entirely on topic or will eviction bans, retail bankruptcies, and other real estate issues come up? If so, here’s what I think we can expect them to discuss.
A bombshell report from the New York Times about Trump’s years of tax avoidance and hefty business losses will undoubtedly lead to some discussion of his years as a real estate developer.
An investigation of Trump’s taxes found that “he carried forward nearly $1 billion in losses from his 1990s real estate bust to avoid paying virtually all personal income taxes, and then repeated the process with a bevy of money-losing businesses during his second act as a reality TV star.” The Times report also described the president’s penchant for carrying over leftover business losses to offset tax bills as “the background music” to his life.
It’s unclear whether Trump’s tax avoidance broke the law, but it is clear that he paid $750 in federal income tax the year he was elected president and the first year he was in office. That’s sure to come up on Tuesday, especially after Biden’s camp on Monday unveiled a Trump Tax Calculator, which shows whether or not you paid more income tax than the president.
Biden wants to change the 1031 tax provision, commonly called the “like-kind exchange,” which allows investors to delay paying a tax on capital gains by reinvesting profits elsewhere.
He’s proposed limits on the exchange in order to fund $775 billion for elderly and child care over the next decade. Following the 2017 tax overhaul, like-kind exchanges apply exclusively to real estate, excluding other assets such as artwork.
If this comes to light it may not bode well for the Boston luxury real estate market, we do need to help the elderly, hopefully, some kind of compromise can be made. However, what’s up with the artwork exclusion.
Trump, on the other hand, has embraced like-kind exchanges: The Trump Organization used one in 2005 to defer capital gains tax on $1 billion in profits made on the sale of a development site on Manhattan’s Upper West Side.
As a person who has conducted several real estate transactions, I have legally deferred losses and gains, (according to my accountant). So I get it. But we need to revisit the tax code. It just doesn’t seem right a multi-millionaire (I’m not sure he’s a billionaire) pays fewer taxes than a Walmart full-time employee.
Biden also wants to reform the Opportunity Zone program, which allows investors and developers to defer paying capital gains taxes when they invest in areas that the federal government has deemed “distressed.” Trump claims the program has helped low-income communities, although a recent Urban Institute study found that it hasn’t incentivized investment in those areas.
Biden has said he would reinstate a fair housing rule, recently repealed by the Trump administration, that required local governments to identify and combat discriminatory housing practices in their communities in order to receive federal funding.
But Trump’s claim of low-income housing ruining the “Suburban Lifestyle Dream,” which he also used to defend repealing the rule, has been called out by many, including Biden, as false.
“It’s just instituting what is already a de facto policy,” Moses Gates, the Regional Planning Association’s vice president for housing and neighborhood planning, recently told The Real Deal. “[Trump] is doing it because he’s getting politically desperate and is going back to the well of what he thinks works — being more and more explicitly, racist.”
The first of three scheduled presidential debates airs at 9 p.m. on Tuesday, Sept. 29.