Tax overhaul’s winners & losers

  • Rep. Mark Meadows, R-N.C., chairman of the conservative Freedom Caucus, speaks during a television news interview just before passage of the Republican tax reform bill in the House of Representatives, on Capitol Hill, in Washington, Tuesday, Dec. 19, 2017. (AP Photo/J. Scott Applewhite) J. Scott Applewhite

  • Vice President Mike Pence strides through the Capitol to the House Chamber to watch the passage of the Republican tax bill, in Washington, Tuesday, Dec. 19, 2017. (AP Photo/J. Scott Applewhite) J. Scott Applewhite

Associated Press
Wednesday, December 20, 2017

Count President Donald Trump among the personal winners in the $1.5 trillion tax package that Republicans in the House and Senate passed Wednesday. It’s not only a political score for Trump but likely a windfall for his real estate empire, too.

Oil drillers would also benefit. So would multimillionaire and billionaire owners of sports teams. Companies would enjoy a bounty from permanently lower tax rates. Lawyers and accountants will profit from the advice suddenly needed to guide clients through the tax plan.

The bill creates plenty of losers, too. An estimated 13 million Americans are projected to lose health insurance. Commuters will no longer receive a perk that has saved them money. Some residents of high-tax states like New York, New Jersey and California will pay more in taxes.

The winners

The Trump Organization: At least temporarily, companies with profits that double as the owner’s personal income would enjoy a substantial tax break. Consider the Trump Organization. It consists of about 500 such “pass-through” entities, according to the president’s lawyers. Rather than pay the top rate of nearly 40 percent, Trump would likely be taxed on these profits at closer to 30 percent.

The final bill also appears to specifically benefit the real estate sector, the bedrock of the Trump family’s wealth, with benefits extended to pass-throughs that own buildings but don’t pay wages to workers.

The president’s family didn’t receive every possible benefit. The estate tax on inheritances, for example, will stay in place, though it will apply only to the portion of a family’s estate that exceeds $11 million – twice the previous level – at least through 2025.

Energy drillers: It’s no longer off limits to drill in Alaska’s Arctic National Wildlife Refuge for oil and natural gas. President Barack Obama had sought to protect the 19.6 million acres, a home for polar bears, caribou, migratory birds and other wildlife. But under the Republicans’ tax plan, fossil fuel companies could tap into oil and gas reserves. Alaska Sen. Lisa Murkowski and other Republicans insist that drilling can be done safely with new technology while ensuring a steady energy supply for West Coast refineries.

Major sports teams: They will still be able to build and renovate their stadiums with tax-exempt municipal bonds. The House version of the tax bill had initially scrapped access to this form of debt by sports teams, a provision that drew objections from the NFL. But the final bill retains it.

Major corporations: The tax rate for most companies would drop to 21 percent from 35 percent. This is a permanent rate cut, which, along with a shift to a lower rate on some foreign earnings, could help boost corporate profits. Not surprisingly, the stock market has soared in part over anticipation of these lower corporate taxes.

Tax lawyers: Rather than close loopholes, the tax bill appears to create more of them. Tax lawyers and accountants will likely be besieged by clients looking for professional guidance in restructuring companies and incomes to avoid taxes.

The losers

The uninsured: The tax bill removes a penalty that was charged to people without health insurance as required by Obama’s 2010 health insurance law as a way to hold costs down for everyone. By eliminating this mandate, the tax bill will likely deprive 13 million people of insurance, according to estimates by the Congressional Budget Office.

Commuters: It could get more expensive to ride the subway or park your car near work. Employers would no longer be able to deduct from their taxes the cost of providing parking or transit passes worth up to $255 a month to workers. Bicycle commuters would also lose their benefit from companies. Technically, companies could still offer this benefit. But under the tax bill, they will lose the financial incentive to do so.

Homeowner in high-tax states: The bill imposes a $10,000 cap on taxpayers who deduct their state, local and property taxes – and the cap isn’t adjusted for inflation. Currently, there is no limit on how much in state and local taxes you can deduct.

Taxpayers after 2025: Most Americans would receive tax cuts initially. But the lower rates and a host of other benefits would expire after 2025. This effectively sets up an $83 billion tax hike for many millions of Americans in 2027. More than half of taxpayers would pay more in taxes that year, according to the nonpartisan Tax Policy Center.

What’s more, people’s taxes could continue to creep up because the plan will adjust the tax brackets at a less generous measure of inflation than it formerly did. The slower indexing for inflation amounts to a $400 billion tax hike between 2028 and 2037 that would help finance the lower corporate rates, Lily Batchelder, a New York University law professor and former Obama White House adviser, observed on Twitter.

Congress could decide years from now to extend the lower tax rates. But doing so would increase the deficit far more than the $1.5 trillion now being estimated by Congress’ Joint Committee on Taxation.