Much has been made of how President Trump will personally benefit from a break for real estate investors included in the sweeping tax bill approved by Congress this week. And rightly so. Some estimates suggest he could reap $15 million per year. But the break is best understood, perhaps, as a guide to all that is wrong with the larger legislative package.
Congressional Republicans slipped in the provision at the last possible moment, as House and Senate negotiators reconciled competing versions of the tax bill, with no real debate. It was an especially underhanded bit of lawmaking, but emblematic of the rushed, opaque process that surrounded the tax bill as a whole.
Congressional Republicans, determined to score a quick legislative victory after a year of futility, pushed the bill through without anything approaching the months of hearings that usually accompany major legislation. Speed, though, hasn’t entirely concealed the lopsided nature of a bill that will confer 83 percent of its benefits on the top 1 percent of taxpayers by 2027, according to the Tax Policy Center. And the provision that will benefit real estate developers is a particularly egregious example of this top-loading.
At issue are tax breaks for owners of so-called “pass-through” businesses, where the company does not pay taxes, but rather passes through income to individual owners, who then report it on their income taxes. An earlier version of the plan gave a break to pass-throughs with substantial workforces or large payrolls. But the new provision confers the benefit on pass-throughs with few employees — including real estate outfits like the president’s.
Republican claims that tax breaks for ultrawealthy business owners turn into higher wages for their workers are ridiculous on their face; trickle-down economics was discredited long ago. But they’re downright absurd when the savings are bestowed on real estate tycoons who don’t have many employees to begin with.
If there’s one thing we’ve learned these past few weeks, though — or one thing we’ve been reminded of — it’s that big campaign contributions can purchase terrible tax policy. And real estate investors are big campaign contributors. Some even hold positions of great influence in the federal government. Senator Bob Corker, a Tennessee Republican with sizable real estate holdings, opposed the tax bill before the break was included, but then voted to approve the final version. He insists the inclusion of the real estate deduction did not affect his vote. And maybe it didn’t. But this much is clear: The senator missed an opportunity to ease public concern about self-dealing and insist on the reversal of a bad policy.
The president, of course, missed the same opportunity. But by now, we know he’ll almost always do the wrong thing — and be duplicitous in the process. The White House insists the tax bill will be a drain on Trump’s finances, when the opposite is plainly true. And the president continues to boast that he’s fighting for the forgotten man, when it’s clear he’s fighting for his cronies. The real estate deduction is more evidence of these priorities. And so is the entire misguided tax bill. Trump and Republicans in Congress have the big victory they’ve been angling for. It will ultimately be up to the voters to reverse it.