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When you strip away the racism and sexism from the Donald Trump campaign, one issue emerges as the core message at all of his rallies: the way that Middle America has lost its economic security over the past few decades.

Which is true! Median wages have been flat since the 1980s, and incomes for white men, especially white men without a college degree, have been falling.

What’s more, Trump’s diagnosis of the problem is also true: Much of the manufacturing labor that used to be performed by Americans is increasingly done by workers in other countries around the world for much lower wages.

Meanwhile, substantially all of the trillions of dollars in new wealth being generated in the U.S. is flowing to a small group of rich families.


Trump is correct, then, that the financial elite have had their thumbs on the scales for decades. They’ve happily signed trade deals which outsourced manual labor to foreign countries, while assiduously protecting their own white-collar jobs. The result is that the value of labor (the amount of money you can get by working for a living) has been steadily declining, even as the value of capital (the amount of money you can get by just doing clever financial engineering with your millions) has continued to rise.

But not every American industry has suffered from these developments. Two industries, in particular, have benefited from the new globalized world: financial services and real estate. And it’s precisely in the nexus of finance and real estate that Trump’s “business” success, such as it is, has been found.


Finance, of course, is the most globalized of all industries. Capital controls were washed away decades ago, and now the world’s trillions are controlled by the global one percent, flowing in and out of countries to devastating effect. And when they flow in, there’s one asset class above all that they love to finance – property, both residential and commercial.

Over the course of Trump’s career, real estate has gone from being about 40% of all money loaned out by banks, to being more than 60%. And most of that is existing stock, rather than new buildings: all that’s happening is that houses and office blocks are becoming more expensive, thanks to easy money from Wall Street. Which means that anybody who owned real estate for the past few decades could hardly help but make money.


Trump and his fellow real-estate moguls could easily have made billions of dollars just riding the rising tide of leverage and property prices in the 1980s, 1990s and 2000s. But that wasn’t enough. They also wanted tax breaks — and boy, did they get them.


Take, for instance, a single line from Trump’s 1995 tax return—line 11, which shows a $15,818,562 loss for the year. As Allan Sloan says, this part of Trump’s return looks very much to be an artifact of something known as Section 469 of the tax code—a loophole available only to property developers, which allows them to pay no taxes on non-real-estate income simply by claiming that the value of their properties has gone down.

Section 469 is exactly the kind of tax legislation which has enriched the elite at the expense of the working class—and it’s exactly the kind of tax legislation which Donald Trump wants more of, not less.


For instance, unearned income in the United States, like the income you get by selling property or other financial assets which have gone up in value, is generally taxed at a much lower rate than earned income. That’s deeply unfair, but Trump will never change it.

It’s worth being clear about this: Donald Trump’s “business” success came by taking advantage of the tax code and the bankruptcy code in ways that are utterly inconceivable to anybody earning old-fashioned wage income. He was a prime beneficiary of the financialization of real-estate and the rise in inequality that accompanied it: everybody who struggles with their rent payments, or who can’t afford a down payment on a home, can in some way blame Trump, the financiers who enabled him, and the legislators who happily took his campaign donations and turned a blind eye.


In other words, if Trump were being honest, he’d admit that he’s the biggest villain of his own narrative, that he’s the person who should pay, not the Mexicans or the Chinese or any other group. That’s why he hasn’t released his tax returns. And that’s why he wants to be president.

Because if there’s any group which will benefit from a Trump presidency, it’s real estate developers and financiers like Trump himself, who have taken advantage of the tax code for far too long.