John Oliver uses Trump tax loophole to avoid paying levy on $9mn NYC penthouse
On Last Week Tonight, Oliver has positioned himself as an everyman, highlighting the cruel injustices in his adoptive home country.
However, it has now come to light that Oliver (net worth $5 million) and his number one target Trump may, in fact, have something in common.
In 2014, John Oliver discussed the ever-widening wealth gap in the United States. But mere months before the segment aired, however, Oliver hired high-profile legal firm Proskauer Rose LLP to handle his complex tax matters.
According to The Observer, Oliver’s lawyer set up two trusts – legal entities which are notoriously hard to prosecute – entitled JO (John Oliver) and KNO (Oliver’s wife Kate Norley Oliver).
The trusts were then used to create a shell company, Hoagie’s Place LLC, affectionately named after the Oliver family’s dog.
In 2015, the shell company bought a 39th floor penthouse in an Upper West Side worth $9.5 million, paying half up front and setting up a $4.75 million mortgage with JP Morgan to pay the rest.
In a cruel twist of fate for Oliver, Trump used to own the apartment building which the then real estate tycoon sold in 2005.
While Oliver paid $9.5 million for the penthouse apartment, New York City council assessed its market value for tax purposes at a mere $1.3 million.
Under city tax rules, only $515,000 of that were subject to property taxes, which at a rate of 12.8 percent, Oliver normally would have paid $66,390. Oliver actually benefitted from a tax break engineered by Trump in the 1980s and instead, paid just $27,343 (or a tax rate of roughly 0.25 percent) for the fiscal year in 2016.
In the 1980s, New York City was experiencing a severe recession and faced the threat of bankruptcy. Banks were loathe to provide any credit to bail the city out and the situation looked increasingly desperate with no hope of redevelopment in sight.
Here, Trump saw a major opportunity to make a fortune with the city backed into a corner.
He negotiated with city officials and reached an agreement to redevelop luxury apartments, estimated to have saved the billionaire property mogul close to a billion dollars in taxes over the following decades.
Trump wanted to use the “421-a” tax exemption in 1980 while redeveloping the Bonwit Teller department store in midtown Manhattan which would later become the first Trump Tower.
“Told by Mayor Ed Koch that the Bonwit site could not qualify for a 421-a tax break, Trump and his lawyer — the infamous Roy Cohn — sued the city,” wrote Latrice Walker and Kevin Parker, two New York State Democrats in an op-ed in The New York Daily news.
“In the end, Trump won a tax exemption worth $50 million for the extravagant Trump Tower. More importantly, Trump’s lawsuit established that all new development, even luxury projects, would be automatically eligible for the 421-a exemption,” they added.
It’s this very tax exemption that has benefited Oliver.