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Donald Trump is worth an estimated $2.5 billion, leaving him $400 million short of the entry fee to this year’s Forbes 400 list of America’s richest people. The former president has lost about $600 million since the start of the pandemic, which upended markets and reshuffled wealth across the country. Technology stocks have soared, boosting the fortunes of Silicon Valley entrepreneurs. New York City real estate tycoons, meanwhile, have suffered, as workers abandoned their offices and shoppers browsed online. Bad news for Trump.
If the former president is looking for someone to blame, he can start with himself. Five years ago, he had a golden opportunity to diversify his fortune. Fresh off the 2016 election, federal ethics officials were pushing Trump to sell his real estate assets and reinvest the proceeds into broad-based index funds. Doing so, they reasoned, would allow him to assume office free of conflicts of interest.
Most executive branch officials have little choice but to listen to ethics officials. Anyone who holds assets that might conflict with their day jobs in government runs the risk of violating the criminal conflicts-of-interest law, which could result in a 5-year prison sentence. The president, however, is exempt from that law, as Trump proudly noted during a press conference nine days before entering the White House. “I could actually run my business and run government at the same time,” he told a crowd of reporters assembled in Trump Tower. “I don’t like the way that looks, but I would be able to do that if I wanted to. I would be the only one to be able to do that.”
Trump decided to hang onto his assets. At the time, they were worth an estimated $3.5 billion, after subtracting out debt. If he had chosen to sell off everything off, there is a chance that he would have had to pay significant capital-gains taxes. Trump acquired his five most-valuable holdings decades ago, so he likely has huge untaxed gains locked up in each of them. If he paid the maximum possible capital gains tax—23.8% to the federal government, plus 8.8% to the New York State authorities on every penny he had—that would have shaved $1.1 billion off his fortune, leaving him with $2.4 billion on the first day of his presidency. But what would have looked like a huge sacrifice at first would have paid off in the long run. By reinvesting that $2.4 billion in a conflict-free index fund like the S&P 500, Trump’s fortune would have ballooned to $4.7 billion by now, leaving him almost twice as rich as he is today. His refusal to divest, in other words, cost him $2.2 billion.
00:13 How much has Trump lost since the pandemic?
00:45 Trump’s perilous business decision
1:22 How the presidency damaged the Trump brand
1:50 What would have happened if Trump invested his money into the S&P 400?
3:17 Trump’s history with the Forbes 400 List
4:52 The Trump metric for success
Read the full story on Forbes: https://www.forbes.com/preview/61548e5b453ede0006476dcb/
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