Mayor Don Guardian Declines to Lower Taxes to Save Trump Taj Mahal
Mayor Don Guardian told the owners of the Trump Taj Mahal that he cannot agree to massive tax breaks for the struggling casino. Guardian’s decision is in response to a suggestion by a group pledged to offer $100 million to turn around the struggling casino. Had Atlantic City offered significant tax breaks to the Trump Taj Mahal, the group was ready to offer a major cash influx.
The Trump Taj Mahal is in bankruptcy court at present and expects to close its doors on November 13, if no last-minute miracles happen. If the casino and resort shuts down operations, Atlantic City will lose another 2,800 jobs.
Carl Icahn Pledged $100 Million to Plan
Mayor Guardian’s decision is likely to undermine an already-unlikely plan to save the casino. The proposal was offered by Carl Icahn, the billionaire known for his corporate takeovers. Icahn is already a member of the board of directors for the Trump Entertainment Resorts, parent company of the Trump Taj Mahal.
The plan put forward by Carl Icahn and his group was to pump another $100 million in funds into the Trump Taj Mahal. Carl Icahn demanded significant tax breaks in return for his investment, but Guardian balked at the idea.
Not in Position to Accept
In announcing his decision, Don Guardian told the AP, “Given the difficult economic situation in Atlantic City, we are not in a position to accept these requests. We cannot afford those demands.”
The plan called for significant reductions in the tax assessment for Trump Taj Mahal and Trump Plaza, which closed on September 16. The tax reduction would be from $248 million down to $40 million for Trump Plaza, along with a cut from $1 billion down to $300 million for Trump Taj Mahal.
Asked for Tax Reduction of $908 Million
The faltering of the casino gaming industry in Atlantic City has meant a massive budget deficit for the city. In 2014 alone, the city has lost four major revenue sources in the Atlantic Club, Showboat Casino, Trump Plaza, and Revel Casino.
For years, Atlantic City’s casinos have appealed for lower tax assessments, because the gambling market has plunged. The city has been faced with the dilemma of how much to cut its budget, under such considerations. The city plans to cut its annual budget by $40 million over the next four years. Mayor Guardian also plans to lay off city workers, raise taxes on businesses, and also raise property taxes on homes.
Cannot Cut Taxes on Trump Properties
In light of such retrenchment, the city simply cannot see itself cutting taxes again for Trump Taj Mahal. Under the circumstances, this would open the door to the other remaining seven casinos asking for a similar tax break.
The current predicament is forcing tough choices on political leaders at the city and state level of government. Leading Democrats in the state legislature want to build a casino in North Jersey. Governor Chris Christie wants to give Atlantic City casinos another year and a half to turn around their fortunes. The difference of opinion could lead to a major legislative battle, with Atlantic City in the middle.
Another Case for North Jersey Casino
For now, it appears as if, when the inevitable political showdown comes, Atlantic City will be without the Trump Taj Mahal. Don Guardian may not have had a choice in denying Carl Icahn’s wishes, but having another casino fail is going to put thousands more workers on the street. It’s also going to provide one more argument for why New Jersey should stop trying to make the casino industry of Atlantic City work and instead focus on North Jersey.
Steve Sweeney and Raymond Lesniak, leading Democrats in the New Jersey State Senate, each have called for the state government to approve a North Jersey casino sooner rather than later. Sweeney wrote a column in which he detailed a plan for a Meadowlands casino which would have collected over $1 billion in revenue to help Atlantic City transition to a non-gaming economy.
About Carl Icahn
Carl Icahn is the majority shareholder of Icahn Enterprises. Icahn has been called a corporate raider in the past, but the term used these days is “activist investor”. In his time as a investor, Carl Icahn has been a key investor is a dizzying array of publicly-traded corporations: Nabisco, Texaco, Viacom, Revlon, Blockbuster, Time Warner, Marvel Comics, Herbalife, and Motorola (to name a few). In 2009, Carl Icahn was one of a group of shareholders who forced Donald Trump out of his role as CEO of Trump Entertainment Resorts. This might explain Trump’s recent tweets criticizing Trump Entertainment’s leadership and his tongue-in-cheek discussion of saving his old company.
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