BUSINESS DAY

Trump Says G.O.P. Tax Bill Wouldn’t Benefit Him. That’s Not True.

Common Sense
By JAMES B. STEWART NOV. 30, 2017


President Trump likes to argue that the tax-reform legislation hurtling through Congress this week will protect low- and middle-income households, “not the wealthy and well connected.” He puts himself forward as Exhibit A.

“This is going to cost me a fortune,” he said on Wednesday in Missouri. “This is not good for me.”

So surely at least a few of the most egregious loopholes that benefit Mr. Trump and real estate developers like him will be closed.

Not in the slightest.

In fact, the proposals seem almost tailor-made to enrich the president and people like him.

“Commercial real estate came out essentially unscathed,” said Douglas Holtz-Eakin, president of the American Action Forum, a conservative advocacy group. Real estate developers “didn’t lose anything they care about,” and they got even more breaks, like a shorter depreciation schedule in the Senate tax bill, Mr. Holtz-Eakin pointed out.

Mr. Trump still has not released his tax returns, so it’s impossible to know to what extent he would personally benefit from the legislation. But there’s little doubt that he would.

“Lower pass-through rates and the repeal of the alternative minimum tax — those two alone are so hugely beneficial to Trump that I have trouble imagining any way that he wouldn’t come out ahead,” said Steve Wamhoff, senior fellow for federal tax policy at the nonpartisan Institute on Taxation and Economic Policy. (The pass-through reference involves income that typically comes from partnerships and limited liability companies.)

Not only that, but rental income, royalty payments and licensing fees — some of the president’s major sources of income — get especially favorable treatment under new rates for pass-through income. (Mr. Trump’s assets include more than 500 pass-through partnerships and limited liability companies.)

“Trump will make out like a bandit on all the big items,” said Steven M. Rosenthal, a senior fellow at the nonpartisan Tax Policy Center.

As many people have pointed out, the “wealthy and well connected,” as Mr. Trump described them, will benefit disproportionately from the proposed legislation. That’s in large part because the big tax cuts for corporations heavily favor shareholders, and the wealthy own a disproportionate amount of stocks and other assets.

Many wealthy taxpayers will also benefit from the lower rates on pass-through income, since such income accrues overwhelmingly to the wealthiest taxpayers.

And I have already pointed out that the modest changes proposed for the tax treatment of so-called carried interest — one of the most egregious loopholes — would have little or no impact on those who benefit from it, including wealthy real estate developers.

Even among that affluent population, the additional breaks that would benefit Mr. Trump and a small cadre of real estate developers like him stand out.

Consider one of the most criticized loopholes in the current tax code: the exemption from taxation of so-called like-kind exchanges. That has enabled owners of property to sell at a large capital gain but defer any tax as long as they use the proceeds to buy some other property.

The House and Senate bills eliminate the favored treatment of like-kind exchanges — except for “real property.” Owners of paintings, for example, would not be able to sell a Cezanne and buy a Van Gogh tax-free. But owners of commercial real estate could keep flipping the properties until they die without ever paying any capital gains tax. (And if the estate tax is abolished, the gains might go untaxed forever.)

https://www.nytimes.com/2017/11/30/business/trump-benefit-tax-cuts.html?_r=0