One of the arguments from Democrats against the Republican overhaul of the tax code is that President Donald Trump, a billionaire, stands to benefit handsomely from the changes being proposed.
In an interview with Sinclair Broadcast Group, U.S. Rep. Lloyd Doggett, D-Austin — a member of the tax-writing House Ways and Means Committee — argued that a vote for the tax bill amounts to a vote to give the president a massive windfall.
“The result in the House (of passing the tax bill) was just a matter of arithmetic and was never much in doubt,” Doggett said. “I am pleased that all Democrats and 13 Republicans voted against what I consider to be a real job-killing bill. I’m not surprised President Trump would come (to Capitol Hill to support the bill) because he and his family would walk off with more than a billion dollars personally.”
Our research suggests that Trump and his family (as well as other wealthy Americans) do stand to benefit from the bill. However, this billion-dollar talking point needs important context that Doggett didn’t provide, including key differences between the House and Senate bills. (Doggett’s office did not reply to an inquiry for this article.)
Also, we don’t know much about Trump’s tax situation due to his own actions. The estimates we have depend on a leaked tax return from 12 years ago, and a lot might have changed since then.
The vast majority of the potential savings for Trump comes from fully repealing the estate tax, which is part of the House-passed bill but not the Senate’s. The estate tax comes into play when someone dies and their estate is large enough to qualify for the tax. Due to generous exemptions, the tax generally hits wealthy taxpayers.
In 2017, estates worth less than $5.49 million are exempt from the tax, according to the Urban Institute-Brookings Institution Tax Policy Center. Above $5.49 million, the estate is generally taxed at 40 percent. However, family-owned farms and closely held businesses may be able to pay less or pay in low-interest installments.
Analyses by The New York Times and NBC attempted to understand how Trump’s finances would be affected by the House bill, relying on a partial tax return from 2005. There’s no way of knowing whether 2005 was an unusual year for Trump’s finances, which would skew the results of a forward-looking analysis.
Still, the New York Times analysis found that Trump’s taxes could be cut by more than $1.1 billion. The elimination of the alternative minimum tax and the lowering of the pass-through tax rate for certain types of business income — minus tax increases from eliminating many existing deductions — would leave Trump $42 million better off. (The alternative minimum tax requires that taxpayers with many deductions pay at least a minimum amount of taxes.)
But the biggest benefit would come from changes to the estate tax — $1.1 billion more for Trump — under a full elimination.
The NBC analysis undertaken by Maury Cartine, the partner in charge of tax and business services in the New York City office of the Marcum Group, found net savings of $22.5 million for Trump, primarily from eliminating the alternative minimum tax, plus $1.1 billion from shelving the estate tax.
In other words, the vast majority of the “more than a billion dollars” Doggett referred to stems from the estate tax. But Doggett left out a few important pieces of context about that figure:
• Trump’s finances are shrouded in secrecy. It’s important to emphasize that any estimates of Trump’s potential savings are subject to a lot of uncertainty due to a lack of hard data on his finances.
• The final tax plan might not include a full estate tax repeal.
• Trump (and his family) wouldn’t simply “walk away” with that much money. “To get it as high as $1 billion, one needs estate tax repeal, and it is certainly right to note that this would be deferred,” said Daniel Shaviro, a New York University law professor who specializes in tax law. “Indeed, under present law the estate tax wouldn’t be levied until Trump’s wife died, rather than just him.”
Doggett said that under the Republican tax bill, Trump “and his family would walk off with more than a billion dollars personally.”
That calculation relies heavily upon Trump family benefits from repeal of the estate tax, and it makes assumptions about the state of the president’s finances.
We rate the statement Half True.
Statement: Under the Republican tax bill, President Donald Trump “and his family would walk off with more than a billion dollars personally.”