President-elect Donald Trump speaks at the House Republican Conference on November 13th.
Alison Robert/Pool (via AP)
“I’m not for sale!” Donald Trump posted on Truth Social on Nov. 8, three days after winning the popular vote and sweeping all seven battleground states for a second term in the White House. . for a “false, deceptive, and possibly illegal” suggestion that he could sell some or all of his 114.75 million shares in Trump Media and Technology Group, which owns Truth Social. It called for an investigation and expressed confidence in the platform, which reported losing some of its shares. $19 million last quarter: “Truth is an important part of our historic victory, and I believe deeply in it.”
This approach is not surprising and is consistent with President Trump’s refusal to divest from business during his first term. But that could be a big mistake. Especially given that he has a clear path to exiting the stock, allaying ethical concerns, diversifying his net worth from one volatile stock, and avoiding a huge capital gains tax bill. Hundreds of millions of dollars. All he has to do is secure a certificate of sale, a routine document for incoming executive branch officials.
When presidential appointees join the government from the private sector, they often hold stock or other assets that they are legally required to sell to comply with conflict of interest laws. Defer capital gains taxes on a transaction if the official obtains a certificate of sale (CD) issued by the Office of Government Ethics and invests the sale proceeds in permitted assets such as diversified mutual funds or government bonds. until the alternative property is sold.
“It used to be that the idea was that you couldn’t have anyone participate in government because it was thought that having a company sell and get a capital gain was a deterrent,” said Virginia Cantor, an ethics lawyer or consultant. he says. After working for several government agencies, he became chief ethics advisor for the watchdog group Citizens for Responsibility and Ethics in Washington.
CDs can be a win-win for everyone involved. “The main benefit for governments is that they can resolve conflicts of interest,” Canter explains. “A potential and arguable benefit to beneficiaries is the ability to diversify their portfolios,” Goldman Sachs CEO Hank Paulson said in 2006, when President George W. When he was named Treasury secretary, Richard Painter, then the White House’s chief ethics lawyer, helped Paulson comply with a request to sell about $600 million in Goldman Sachs stock. “It’s great for Hank Paulson, who retired from Goldman Sachs in 2006,” Painter said. “And I think he should have called me and thanked me in 2008 when the bottom fell out of the market.”
Diversification may also be of particular value to President Trump. His Trump Media stock tends to fluctuate widely in price, with a low of $12.15 (September 23) and a high of $51.51 (October 29) since September 1st. There are multiple peaks and valleys. . That means, at this point, his net worth is more tied to the platform than to his decades-long fortune or resort empire, and it’s fluctuated wildly. In October, it doubled from $4 billion to $8 billion, and now stands at $5.3 billion.
But even if moving volatile investments into index funds isn’t attractive enough, deferring capital gains can be a big benefit. If Trump were to sell all his shares at Friday’s closing price of $28.10 a share, he would likely have to pay about $770 million in taxes on the $3.2 billion proceeds. (Actually, both numbers would be smaller overall, since stock prices would likely fall if a huge amount of his stock suddenly hit the market.) With a certificate of sale, he You can immediately put that $770 million into a diversified portfolio and not have to worry about it. More on taxes later.
That is if he can get it. Conflict of interest laws are not legally binding on presidents and vice presidents (however, historically, all presidents, except Donald Trump in his first term, have created blind trusts. (We follow that spirit by selling conflicting holdings). Walter Shaub, who led OGE when Trump first took office, told Forbes in 2020 that he would have issued it if Trump had asked for it, and that it would have been issued when recipients filed their taxes. He said he hoped the IRS, which reviews CDs, would respect that. (Mr. Schaub could not be reached for comment for this article.) Mr. Schaub’s predecessor, Don Fox, who led the agency from 2011 to 2013, disagreed, saying that if he were to lead the agency. He pointed out that if the presidential CD issue had been in front of him when he was in office, he would have thought: He would have had to defer to Congress. “You can’t have it just because you want it,” he says.
Canter said if the OGE determines it lacks authority, it could seek clarification from Congress, but could also use an executive order issued by Biden or President Trump. Painter agreed there may be some uncertainty, but felt the president “should” be able to get the CD. “If not, the Office of Government Ethics regulations should be amended as soon as possible so that the president can obtain the certificate and enjoy the same benefits as everyone else,” he added. An OGE spokesperson declined to comment.
The implications of Mr. Trump’s stock holdings could be severe and extend beyond his own finances. Cantor, Foxx, and Painter all argue that the fact that Trump will appoint the head of the agency that regulates Truth Social means that foreign governments and domestic special interests will be buying advertising on the platform and that Trump will They expressed various concerns, including the possibility of lining the pockets of the government. “There is no precedent for this in the United States,” Fox said. “Will Truth Social essentially become a state-sponsored social media once he takes office? How do you read articles posted on social media platforms owned by the sitting U.S. president?” President Trump’s first Trump’s newly founded cryptocurrency company, not to mention his real estate empire, which has sparked lawsuits and endless battles over conflicts of interest during his term, raises similar questions.
The president-elect seems unconcerned, downplaying the possibility of a confrontation at Fox News Town Hall in January. “If you have a hotel and someone comes from China, it’s a small amount,” he said.
With additional reporting by Dan Alexander.
Editor’s note: In November 2023, Trump Media sued 20 media outlets, including Forbes, for reporting that included calculations of financial performance of privately held companies. Defendant filed a motion to dismiss the claim.
