1/10 Four years ago we knew Trump’s refusal to divest would have political consequences. Now we know it had big financial consequences as well.
In fact, the decision to retain his assets cost Trump an estimated $1.6 billion. Let’s break down the math.
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2/10 When Trump took office, we estimated his fortune was worth $3.5 billion (or $3.495B, to be exact). If he had sold everything off, he *might* have had to pay capital gains taxes, which would have cost him a lot of money.
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3/10 The New York state capital gains taxes would have been 8.82%. The federal capital gains taxes would have been 20%. And then there’s another 3.8% tax on top of that. So the total would be 32.62% taxes. As we know, Trump does not like to pay big taxes.
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4/10 Trump would have paid those taxes on the gains he had made—not on his entire fortune. But because it’s difficult to pinpoint those gains, and to be even more conservative, we’ll apply that capital gains tax to his *entire* fortune for our calculation.
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5/10 That means that after selling everything, Trump would have been worth $3,495,000,000 * (1-0.3262) = 2,354,931,000 on Jan. 21, 2017. That’s a big drop. He could have spent a lot of time talking about the big sacrifice he took to take office with clean hands.
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6/10 Trump could have then put that $2.355B into a broad-based fund tracking the S&P 500, which would have allowed him to avoid conflicts of interest while still capturing upside of the market.
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7/10 And boy, was there upside, as Trump would be the first to tell you. The S&P 500 increased 69.59% while he was in office. With his whole fortune reinvested in the market, then, it would have jumped to 2,354,931,000 * (1+0.6959) = $3.994B.
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8/10 We now estimate Trump is worth $2.4 billion (or $2.356 billion, to be exact). So his refusal to divest cost him an estimated $3.994 billion - $2.356 billion = $1.638 billion.
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9/10 Obviously there are different scenarios you could run. What if he hadn’t had to pay capital gains tax? What if he had invested more in bonds than stocks? And so on. It’s hard to pin down an exact number on a hypothetical. But $1.6B seems like a fair, conservative estimate.
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10/10 Bottom line: Trump’s refusal to divest was a huge blunder for a man who prides himself on his business acumen. If he had just listened to the ethics experts, his presidency would have been cleaner and his fortune would now be much bigger.
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