Trump said, "I stand to lose bigly with this tax cut, believe me." the truth.
President Trump, who won the White House on a wave of populist promises, will likely save millions of dollars thanks to Congress's approval of a tax plan he pledged was designed for the middle class.
Trump, who said he would be a "big loser" if the bill passed, stands to gain immensely from the Republican tax overhaul, including through a lower top tax rate and lucrative deductions for top-earning households, according to attorneys and tax experts who reviewed the final bill.
Trump could also take advantage of benefits that will lift specific business sectors, including a last-minute tax deduction that helps many owners of high-value commercial real estate, the industry where he first made his fortune.
Subscribe to the Post Most newsletter: Today’s most popular stories on The Washington PostThe tax plan's transformation into law crystallizes the contrast between Trump's populist rhetoric and the private fortune he made by marketing condos, hotels and golf resorts to a wealthy clientele.
The Republicans' first legislative triumph of 2017 will ensure a financial windfall for the president and his family in a way that is virtually unprecedented in American political history, experts said.
"I'm not even aware of a single provision in the bill that disadvantages him or his family, other than the change to state and local tax deductibility," said Daniel Shaviro, a tax professor at the New York University School of Law who worked for Congress's Joint Committee on Taxation during the country's last major tax overhaul in 1986."It's so clear that he is financially much better off than previously," he said, adding, "I'd be at a loss as to how they could even dare to argue" otherwise.
Exactly how much the president could save under the plan is unknown, since Trump has broken with 40 years of White House precedent by refusing to release his tax returns.
The White House has claimed repeatedly that the tax bill could cost the president "a lot of money," without providing evidence. On Tuesday, press secretary Sarah Huckabee Sanders acknowledged that the overall impact on his finances could be more complicated. "In some ways, particularly on the personal side, the president will likely take a big hit," she said. "But on the business side he could benefit."A half-dozen tax attorneys, professors and former congressional tax drafters told The Washington Post that Trump would undoubtedly benefit from the legislation, which Congress passed on Wednesday and sent to his desk for a final signature.
In a statement Wednesday, Trump said, "I promised the American people a big, beautiful tax cut for Christmas. With final passage of this legislation, that is exactly what they are getting."
The financial benefits that the new tax law will provide Trump and his family contrasts with the GOP promise that new corporate tax cuts in the measure will lead directly to job creation. Major planks of the legislation, including a deduction for the kind of "pass-through" business Trump is known for, explicitly advantage owners of companies with highly valued assets but few actual employees.Tax experts said any personal boost in the president's taxes would likely come from the bill's reduction of the state and local tax deduction, which has largely benefited residents of high-tax states such as California, New Jersey and the Trump family's home state of New York.
But Trump will also personally benefit from the plan's lowering of the top tax rate for America's wealthiest people from 39.6 percent to 37 percent. Forbes magazine estimated in October that Trump was one of the country's richest people, with a net worth of more than $3 billion.The state or local tax changes would also likely be heavily outweighed by the potential benefits offered to Trump on the business side, tax experts said.
A major provision in the bill, added last week, offers a 20 percent tax deduction for the owners of so-called pass-through businesses, which do not pay corporate taxes but pass through income to their owners' individual income taxes.Nearly all of the more than 500 private businesses Trump has claimed on his financial disclosure documents — including his umbrella company, the Trump Organization — are pass-throughs, so the bulk of his income will likely see an immediate tax break.
An earlier version of the tax plan had given bigger pass-through deductions to businesses with bigger workforces or higher payrolls. But the new version allows companies like Trump's — which own valuable property but pay few to no employees — to also reap the benefits. Tax experts said real estate, rental and leasing businesses will benefit more than any other industry.That change alone could save Trump millions, based on documents from Trump's 2005 tax return, which were revealed earlier this year by journalist David Cay Johnston. That year, Trump said he had made $67 million from rental real estate, partnerships and other pass-through companies, as well as an additional $42 million in business income.
Steve Rosenthal, a senior fellow at the Urban-Brookings Tax Policy Center at the Urban Institute, said "the benefit will be immense" for Trump. "The bottom line is the taxes he pays today are higher than the taxes he will pay in the years in the future," he said.Those business-tax changes will also benefit Trump's family, including his adult sons, Donald Jr. and Eric, who now manage the Trump Organization, and his daughter and son-in-law, Ivanka Trump and Jared Kushner, who work in the White House but also have private ownership stakes in clothing and real estate companies.
The new plan will also reduce the estate tax, which affects the inheritances of a few thousand of America's wealthiest families, including Trump's. The tax bill will allow a married couple to pass on up to $22 million in assets without having to pay the tax.Congressional Republicans celebrated the tax plan as a boon for the working poor, with House Speaker Paul D. Ryan (R-Wis.) saying this week, "For all those millions of Americans struggling paycheck to paycheck, help is on the way."
But the biggest chunk of the plan offers a stark and permanent tax cut for American companies, dropping the corporate rate from 35 percent to 21 percent.Income-tax rates for everyone will drop temporarily, though the financial impact will be largely concentrated at the top. Families earning less than $25,000 a year would receive an average tax cut of $60; families making between $50,000 and $75,000 will get an average cut of $890; and families making more than $1 million would get an average cut of nearly $70,000, the nonpartisan Tax Policy Center said.
The plan's effect on the national deficit, a Republican sounding point during the Obama years, could be astronomical. Congress' official Joint Committee on Taxation, assessing an earlier version of the bill, said it would add $1 trillion or more to the deficit over the next decade, even factoring in expected growth of the U.S. economy.Sanders repeated this week that Trump would not release his tax returns "as long as they're under audit." Nothing prevents Trump from disclosing his returns, including an audit, Internal Revenue Service officials and attorneys say, and every president has done so routinely for the past 40 years.
As a rule, the IRS has for several decades audited the president and vice president every year. Legal experts say voluntary releases of tax returns, a tradition dating back to Richard Nixon, have allowed the public to serve as a check-and-balance on whether the president is being enriched by the position.Edward Kleinbard, a former chief of staff for Congress's Joint Committee on Taxation and a professor at the University of Southern California Gould School of Law, said the tax bill's passage should raise pressure on the president to reveal tax returns showing how much it could improve his finances.
"If Donald Trump is sincere that he will not gain from this tax bill, it's time he lay his cards on the table and show us," Kleinbard said. "It's just not possible that this bill doesn't convey tremendous tax savings to him. What does he gain? Up to a 20 percent deduction associated with all the tax bills associated with all his businesses. What does he lose? Nothing."
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If he says, "Believe me", don't.
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