Trump could personally benefit from changes to tax bill

WASHINGTON — Last-minute changes to the Senate tax bill could personally benefit President Donald Trump, who has investment stakes in roughly 500 entities that could be impacted by the planned adjustments.

Republicans are seriously considering expanding a new tax credit these types of entities use to lower their taxable income in a way that benefits most people tied to these firms. Trump and other senior administration officials have been in personal contact with lawmakers about the changes.

The changes focus on “pass through” entities, which are a type of company that direct incomes through the individual income tax code and not the corporate tax code. There are millions of these entities, and they are most often sole proprieterships, limited liability companies or partnerships. Trump’s stakes in these entities include many large and small ventures, including the Trump Organization.

Trump’s 2005 tax return showed he had more than $109 million in income from businesses, partnerships and passthrough entities, though he has not released updated figures so the precise impact is not known.

Trump has become the first president in 40 years to refuse to release his tax returns, making it hard to know exactly how much he would gain from his tax policy. But a letter from Trump’s lawyers last year said that nearly all of his companies count as pass-through entities.

“You hold interests as the sole or principal owner in approximately 500 separate entities,” Morgan Lewis attorneys Sheri Dillon and William Nelson wrote in a letter released by the Trump campaign. “Because you operate these businesses almost exclusively through sole proprietorships and/or closely held partnerships, your personal federal income tax returns are inordinately large and complex for an individual.”

Many of Trump’s most signature properties, including the Mar-a-Lago Club in Palm Beach, Fla., and the Trump-branded golf courses across the country, are linked to limited liability companies, or LLCs, that would qualify as pass-throughs under the tax code, financial disclosure filings show.

Senate Republicans have proposed changing the way these firms pay taxes, allowing them to deduct 17.4 percent of their income from their taxable income.

But Sen. Ron Johnson, R-Wis., has said he would not support such a bill, because he doesn’t believe it’s generous enough for pass through entities. Now Republican negotiators, in order to mollify Johnson, are looking at changing the tax bill and expanding it to allow people to deduct 20 percent of a firm’s income.

Such a change could expand the tax benefit for Trump because of his investments, though the precise details of the change couldn’t be learned and this would impact what benefit — if any — Trump received.

Trump on Monday didn’t say what specific changes to the tax bill would look like.

“The Tax Cut Bill is coming along very well, great support. With just a few changes, some mathematical, the middle class and job producers can get even more in actual dollars and savings and the pass through provision becomes simpler and really works well!” Trump wrote Monday on Twitter.

Democrats have attacked the GOP tax proposals and alleged that they would disproportionately benefit companies, while offering limited and temporary benefits for families and individuals. Trump has said he would not personally benefit from the tax changes, telling senators that his accountant said he would actually fare worse under the tax bill than if no changes were made. But the White House has not offered any details to explain how he came to this viewpoint, and many believe Trump and his family would benefit greatly.

“He would definitely benefit personally, and in a number of different ways,” said Steven M. Rosenthal, senior fellow at the Urban-Brookings Tax Policy Center, an organization that analyzes tax proposals.

The tax cut bill that passed the House of Representatives would treat pass through entities differently than the Senate bill would.

The House bill would cut the top tax rate these entities pay from 39.6 percent to 25 percent, while the Senate bill would instead allow these companies to deduct a percentage of their income.

President Donald Trump has said he would not personally benefit from the tax changes. But the White House has not offered any details to explain how he came to this viewpoint, and many believe Trump and his family would benefit greatly.