You’ve heard of the so-called Pottery Barn rule: “You break it, you buy it”?
Maybe it’s time for the banana republic rule: “You forget it, you forfeit it.”
For the 39th time, top presidential adviser (and son-in-law) Jared Kushner has revised his financial disclosure forms. Kushner disclosed 77 additional assets, collectively worth millions of dollars. These items were “inadvertently omitted” from previous versions of his federal forms, according to a document the White House released Friday.
Hey, I get it.
Financial assets — like meetings with Russian officials — can easily slip one’s mind. Especially if one’s mind is preoccupied with brokering peace in the Middle East, managing diplomatic relations with China, renegotiating the North American Free Trade Agreement and fixing the entire U.S. government.
And honestly, who among us has not forgotten a multimillion-dollar asset here or there?
Surely we’ve all reached into the couch cushions, searching for the TV remote, and pulled out a forgotten New Jersey liquor license worth between $500,001 and $1 million. Why, just the other day I was looking for a quarter for the office soda machine and instead stumbled upon a neglected personal art collection valued between $5 million and $25 million.
Maybe Kushner really did forget all those assets, including a stake in a start-up valued at $5 million to $25 million. Just as maybe he really did accidentially submit a security-clearance form that left off more than 100 contacts with foreign nationals.
One reason to give him the benefit of the doubt, at least on his financial forgetfulness: Kushner, like many of President Trump’s senior officials, is really rich. And really rich people, almost by definition, have a lot of assets to keep track of.
They also tend to have far-flung holdings structured in complicated ways, with LLCs inside LLCs inside LLCs, matryoshka-doll-style. This is both to minimize tax burdens and maintain some level of privacy.
All of which is to say that maybe it’s legitimately difficult for someone such as Kushner to keep track of what he owns (and whom he owes).
It’s true that willfully omitting an asset on one’s federal financial disclosure form comes with the risk of criminal action. But how motivating can a threat of prison possibly be if Kushner knows he can just go back and add anything that the press happens to dig up?
That’s exactly why we need the banana republic rule (named for the lawless state, not the store).
It might push Kushner — and other ultra-wealthy people serving the president — to be excruciatingly thorough on these forms. Here’s how it would work.
Above a certain value — let’s say $1 million — any assets that are “forgotten” on federal disclosures can be seized by Uncle Sam. If they weren’t memorable enough for these forms, then clearly you’re rich enough that you don’t really need them.
Treasury gets to take them, without compensating you.
“That’s socialism!” you might protest. But really, it’s not so different from another policy that the definitely-not-socialist Trump administration already backs enthusiastically: civil asset forfeiture.
This is when law enforcement seizes private property without proving the owner is guilty of a crime, often without even charging the owner with a crime. Just last week, Attorney General Jeff Sessions announced he was restarting a federal forfeiture program the Obama administration had shut down.
“Civil asset forfeiture takes the material support of the criminals and instead makes it the material support of law enforcement,” Sessions explained, even though the stuff being seized is not necessarily providing “material support” for any crime or any criminal.
With such tenuous logic, why shouldn’t Sessions support appropriating possibly-innocent-but-still-kinda-suspicious financial disclosure omissions, too?
I’m not the first one to suggest a fix like this, by the way.
In the 1960s, famed University of Chicago economist Arnold Harberger proposed a self-assessed property tax system that worked much the same way. You’d register the value of your assets with the government — and you’d be required to sell your property at these self-declared valuations to any buyer.
For example, if you preposterously claimed your fancy golf club was worth no more than $5 million, you could be forced to sell it at that price on the spot. Likewise, if you omitted an asset entirely, that would be equivalent to saying the asset was valued at zero — and it could be taken from you without compensation. Lowballing or outright omissions could be much more costly than simply paying a fairly assessed tax.
This so-called Harberger tax is intended to encourage greater honesty, much needed in countries where institutional enforcement is weak.
Back in the ’60s, Harberger was pitching this idea to Latin American countries struggling with corruption and lawlessness. But all of a sudden it seems so relevant here in the United States.