“Pump and Dump” is a well-known and highly illegal form of stock manipulation where companies collude to buy large amounts of stock to “pump up” the price. Seeing rising stock prices, uninformed investors buy the targeted stock. When the price peaks, the scammers dump the stock and profit from the inflated stock price. Everyone else loses money as the stock crashes.

Trump is on trial for a real estate version of Pump and Dump. Rather than profiting from selling inflated real estate, Trump inflated the price of property to get inflated loans. Trump increased the valuation of his properties without any supporting proof, highlighting the ease with which a powerful real estate company can illegally inflate property values. This is why there are severe penalties for misrepresenting the value of property.

What about genuine differences in opinions? Two real estate companies might provide two different valuations for the same property, but there are limits to how much they should differ. For the sake of argument, if the difference between the low and the high estimate is 10 times as much, one of the two estimates are questionable. Some sort of self-interest would be suspected.

But a criminal act is more than mere incompetence. You need to ask, “Is the difference due to intentionally misleading an investor?” How can you be sure about someone’s intentions? Is there documentation that other parties were given a very different valuation? This is what Trump did, using one set of numbers for banks and another set of numbers for his taxes. Let’s examine the details of Maralago, the property being examined by the court.

In 1985, Trump paid $5 million for the house and property, plus another $5 million for furnishings. If the valuation included all furnishings, that’s $10 million. 40 years later the property would have appreciated. What is it now worth? A local newspaper reported, “From 2011-2021, the Palm Beach County Assessor appraised the market value of Mar-a-Lago at between $18 million and $27.6 million… (on his tax forms) Trump ‘agrees’ his club should be valued at only $26.6 million.”

Yet, Trump violently disagrees with his own tax valuation. The Daily Beast reported, “The judge noted Trump valued Mar-a-Lago at between $426.5 million and $612 million (in bank loan documents).” Inflating the value by 20-30 times is not a minor difference of opinion (between Trump and… Trump?). And this happened over several years, making it much more difficult to dismiss as a mere accident.

Recently Trump stated that Maralago may be worth $1.5 to $1.8 billion. His latest valuations may or may not admissible evidence for the court. Still, Trump should hope that the IRS isn’t listening.

Trump’s defense team has claimed that Maralago is worth more than another Florida property… The Manalapan. The Manalapan’s property has twice the acreage of Maralago, with the main house being double the square footage of Maralago. Yet this property sold for $179 million, a quarter of Trump’s valuation for Maralago.

While Trump’s financial and political representation are many, the real focus of this article is not Trump. Trump did not invent the Pump and Dump. It was probably invented by the Romans, once tax collecting became a bit too efficient for local landlords. Our real focus is everyone in Trump’s tax bracket, which appears to be the “zero tax” bracket. What if all ultra-rich participate in similar schemes? Is this why we have a budget deficit? Do we need to more aggressively audit the rich to see if Trump is just typical of most rich Americans?

The super-rich hates paying taxes so much that they hire private armies of lawyers and accountants. Accountants to ignore taxes, and lawyers if they get caught. A 2021 White House study found that the average American pays around 13%, but the 25 wealthiest Americans paid a mere 3.4%. If America’s wealthiest paid the average rate, tax revenues would rise by $52 billion. And that’s just individuals. The Governement Accounting Office (GAO) found that 20% of America’s largest corporations paid… nothing.

Exposing Trump’s financial misdeeds may drive some critical tax reforms. It should certainly make us consider if our tax system treats all citizens fairly. For years the IRS has been telling us that they need staff to audit more people, especially rich people. And they need to shift from auditing the poor and middle-class, to the ultra-wealthy because they have far more opportunities to hide their income.

What do you think? Is the tax system fair? Has the Trump trial made you question if the rich pay their fair share? Let us know!