Seth Hanlon Profile picture
Nov 5, 2017 59 tweets 10 min read Twitter logo Read on Twitter
The Republican tax bill looks like it was written by Donald Trump’s accountants and tax lawyers, and I’m not even joking. 1/
It would be hard to design a tax plan more friendly to billionaire real estate magnates like the Trumps and Kushners of the world. 2/
Where to begin? How about the “Trump Loophole” – the special low tax rate for wealthy “passthrough” owners. (Sec. 1004 of the bill.) 3/
Passthrough businesses are entities like partnerships, LLCs, and S-corps that don’t pay corporate tax. 4/
The Trump Organization is comprised of 500+ passthrough entities. The Kushner Companies are also structured as LLCs. 5/
Currently, millionaires and billionaires pay a 39.6% rate on passthrough business profits. Sec. 1004 of the bill cuts that rate to 25%. 6/
We’ve estimated that Trump could get a $23M annual tax cut, & Jared Kushner $6-17M, from this new loophole. 7/

americanprogressaction.org/issues/economy…
All told, it’s a $450 BILLION tax cut, overwhelmingly for millionaires. (Could be more if the loophole is gamed more than JCT expects) 8/
Next, we go to Section 1602 of the House Republican bill, which repeals the tax on multimillion-dollar estates. 9/
If Trump signs an estate tax repeal into law, the tax windfall for his heirs could be more than $1 BILLION. 10/
nytimes.com/interactive/20…
Of course it’s not that surprising that a GOP tax bill would repeal estate tax. (which applies only to the wealthiest 1 in 500 estates) 11/
What IS a surprise is that while the bill repeals the estate tax, it ALSO keeps in place the giant loophole known as “stepup in basis.” 12/
That loophole allows ppl to accumulate huge amounts of wealth & never pay income taxes on it during their lifetime. 13/
Now their heirs will inherit tax-free as well. 14/
Even when G.W. Bush repealed the estate tax (temporarily), he reformed “stepup” to ensure huge fortunes wouldn’t go untaxed forever. 15/
This Trump-GOP bill is much more extreme, in that respect. All gain, no pain, for wealthy heirs. 16/
Moving on, we come to the parts of the bill that actually do a little bit of “tax reform,” not just tax cuts. 17/
For example, section 3303 repeals “like-kind exchanges,” which allow people and companies to swap assets w/out paying capital gains tax. 18/
But wait! One industry is carved out of this reform, so that they can continue using like-kind exchanges. Hmmmm. 19/
In combination with “stepup,” like-kind exchanges can let real estate developers avoid cap gains tax on their properties indefinitely. 20/
That’s a sweet deal for the Real-Estate-Developer-in-Chief. 21/
Section 3301 also limits the deductions that businesses can claim for interest payments. 22/
But what do we have here? Another special exception for real estate businesses! They’re carved out of the new limits. 23/
Remember, Donald Trump called himself the “King of Debt.” Trump Org. interest deductions are untouched. 24/ politico.com/story/2016/06/…
And I can think of another RE developer who's prob relieved he can still write off interest on his large debts. 25/
bloomberg.com/graphics/2017-…
Finally, we come to section 2001, repealing the Alternative Minimum Tax. 26/
The AMT is a backstop to the regular income tax, ensuring that high-income people pay at least some tax. 27/
We’ve seen one year of Donald Trump’s tax returns, from 2005. That year, he paid $31 million in AMT. 28/
Without the AMT, he would have paid a tax rate of less than 4% that year. AMT is repealed in this bill. 29/
So, to sum it all up, I don’t know how this bill could be friendlier to Donald Trump, while raising taxes on many middle-class families. 30/
The ultimate outrage is that the Republican members of the Ways & Means Committee, which will be voting on this bill this week... 31/
..., have repeatedly blocked efforts to obtain Trump’s tax returns. 32/

msnbc.com/rachel-maddow-…
The Committee has unilateral power to obtain Trump’s tax returns – but the majority Repubs have voted down the Dems’ attempts to do so. 33/
They’re now rushing fwd on the bill w/out a single hearing to scrutinize special deals for ppl like Trump or impact on regular fams. 34/
If you’re as outraged by this bill and the process as I am, please call yr member of Congress and demand #NotOnePenny for Donald Trump. 35/
Here are the Committee Republicans who will be voting on the bill this week. We need to light their phones up & give them an earful. 36/
I’ll keep this thread open as we continue to dig through the bill. 38/
UPDATE: NYU tax law professor @davidckamin has discovered ANOTHER potentially huge loophole for Trump - this one is a doozy. 39/
Would you believe the House GOP bill takes away your ability to deduct state & local taxes but keeps that tax break for Donald Trump? 40/
As David explains, it looks like "passthrough" business owners like Trump are exempted from "SALT" repeal. 41/

41/

medium.com/whatever-sourc…
(SALT = Acronym for the tax deduction for State And Local Taxes.) 42/
Trump & Sec'y Mnuchin have often alluded to SALT repeal to suggest that people like them would lose tax breaks under their plan. 43/
But, it turns out, they're only taking away SALT for workers - not for business owners or investors like them!!! 44/
There is zero chance that the rank-and-file members of the Ways & Means Committee have thought through this issue. 45/
They may not even be aware of it. And the markup STARTS TOMORROW! Again, leaving this thread open b/c we are still scouring the bill. 46/
UPDATE: I just realized another way this bill is extra-friendly to Donald Trump. 47/
Back in May, Trump was talking about all the crazy deductions in the tax code that he benefits from, implying that he'd get rid of them. 48/
He said that he gets deductions for "birds flying across America." It sounded nutty, but he was actually talking about a real deduction. 49/
As Politifact explains here, he was referring to charitable deductions for "conservation easements." 50/

politifact.com/truth-o-meter/…
Those are where a landowner promises not to develop on his property for conservation purposes (e.g. to protect migratory bird patterns). 51/
And since the land is, in theory, worth less if it can't be developed, the owner claims a charitable deduction for the foregone value. 52/
Many of those deductions are legit. Some are not. One particularly suspect category is conservation easements on golf courses. 53/
As @RichardRubinDC reported, Trump's pretty clearly taking big deductions for easements on his golf courses. wsj.com/articles/donal… 54/
That's pretty shady. Trump basically admitted it's shady. So you'd think it's the type of thing a "tax reform" bill should clean up. 55/
In fact, the Obama Administration proposed ending conservation easements on golf courses, among other reforms. 56/
But in the House GOP "tax reform" bill, there's no reform of conservation easements. The "birds flying over America" deduction lives on. 57/
This is sort of like the tax code equivalent of Trump saying he could shoot someone on 5th Avenue and get away with it. 58/
Trump went on national TV and said he deducts "birds flying over America" from his taxes AND THIS BILL PRESERVES THAT DEDUCTION FOR HIM. 59/

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More from @SethHanlon

Nov 30, 2017
💥💥OMG - WE KNEW IT!! MNUCHIN HAS BEEN LYING ALL ALONG! 💥💥

Whistleblower: The Treasury analysis showing that tax cuts pay for themselves that Mnuchin has been promising (and even suggested already exists!) DOES NOT EXIST AT ALL. Career economists shut out of the process! 1/
Link to bombshell @arappeport story:
nytimes.com/2017/11/30/us/…

2/
Mnuchin said on Nov. 13 that they had already published this nonexistent analysis.

3/
Read 9 tweets
Nov 30, 2017
My colleague @ggrhendricks and I looked at how much @SenRonJohnson and @RealDonaldTrump could benefit from the last-minute sweetener that was added to the #GOPTaxBill today. 1/
Johnson, joined by Senator Steve Daines, has been pushing make the huge loophole that the bill creates for people like Johnson and Trump even bigger. 2/
The underlying Senate bill allows a 17.4% deduction from net income from passthrough entities (e.g., S-corps, LLCs, partnerships), meaning that the top tax rate on that income would effectively be cut from 39.6% to 31.8%. 3/
Read 16 tweets
Nov 28, 2017
I really don’t know where @SenBobCorker is going with this idea of a “trigger,” but it’s critical that he is asked some specific questions this week to hold him to his promises. 1/
Those questions include:

(A) how is he applying his preferred “current policy” baseline to the Senate tax bill, given its many sunsetting provisions?

(B) what revenue levels need to be hit to avoid the trigger? 2/
Remember, Corker has promised not to vote for any bill that adds “one penny” to deficits because deficits are “the greatest threat to our nation.” 3/

nbcnews.com/politics/polit…
Read 22 tweets
Nov 18, 2017
WOW. We knew the Senate Republican tax bill was bad but these graphs from the Institute for Taxation and Economic Policy (@iteptweets) are still shocking.

The bill RAISES taxes on low- and middle-income households while cutting them on high-income households.

1/
The top 1% gets a tax cut of $9,000 in 2027. At the same time that the poorest income groups get a tax hike of about $200. 2/
You won't believe this but it's true. The Senate GOP bill gives a bigger tax cut to FOREIGN INVESTORS than any group of U.S. taxpayers. In fact, the bottom 60% is basically paying for the tax cut for foreign investors.

America First? Country first? Make America Great Again?

3/
Read 9 tweets
Nov 17, 2017
I stand by my tweets 100% on this. The WSJ here quotes the industry and congressional sponsors. The issue is complicated, and it is a real issue. 1/
The provision that was put into the tax bill on Tuesday night settles a longrunning dispute between the jet management companies and the IRS, providing very valuable certainty for them. 2/
It did so in the SAME overnight amendment that made all of the tax cuts in the bill for individuals expire after 2025. Which will create vast uncertainty for everyone. 3/
Read 12 tweets
Nov 17, 2017
One of the more insidious ways that corporations game our political system is by funding intellectually shoddy work that supports their policy goals. This is a thread about an organization here in Washington called the “Tax Foundation.” 1/
The Tax Foundation has gained a lot of credence in the debates on tax policy. Its experts are often quoted in the press. They are smart people. 2/
But the fact is, the Tax Foundation is a mission-driven, advocacy organization that advocates for tax cuts, and especially, corporate tax cuts. 3/
Read 28 tweets

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