Donald Trump and six members of his inner circle will be big winners of the Republicans’ vast tax overhaul, with the president personally benefiting from a tax bill cut of up to $15m a year, research shows.
The US president chalked up his first big legislative win on Wednesday with the $1.5tn bill, the most sweeping revamp of the tax code in three decades, slashing taxes for corporations and the wealthy and dealing the heaviest blow yet to Obamacare.
But analysis by a leading Washington thinktank, the Center for American Progress (CAP), finds that changes to business rules will save Trump roughly $11m to $15m per year, while an amendment to the estate tax – the tax on the transfer of an estate of a deceased person – would potentially save his heirs $4.5m.
Under current law, the first $11.2m of a couple’s estate’s value is excluded from taxation, and any amount above this is taxed at a 40% rate. The new bill doubles the exemption to $22.4m.
Along with Trump himself, Wilbur Ross, the commerce secretary; Linda McMahon, administrator of the Small Business Administration; Betsy DeVos, the education secretary; Steven Mnuchin, the treasury secretary; and Rex Tillerson, the secretary of state, will benefit to the tune of $4.5m from changes to the estate tax, according to the CAP.
More than 90% of businesses in the US are “pass-through businesses”, meaning their income passes through to the owners’ individual tax returns, where it is taxed at ordinary income tax rates, instead of being filed on a separate business return like a corporation. The sweeping tax bill cuts the top rate on “qualified” pass-through business income from 39.6% under current law to 29.6%.
Assuming the full personally benefit of this, the CAP roughly estimates a tax cut of $11m to $15m for Trump (based on an estimate of $150m of passthrough income from reviewing his financial disclosure, and the $109m in real estate/pass-through income on his 2005 tax return); $5m to $12m for Jared Kushner, White House senior adviser and Trump’s son-in-law; and $2.7m for Betsy DeVos, the education secretary.
The bill that passed the Senate had a “guardrail” that prevented businesses with too few employees from claiming the full benefit of the deduction, the CAP noted. But at the last minute, a special exception was added that is especially beneficial to real estate firms.