WASHINGTON ― While middle-class rates, deductions and credits in President Trump’s tax proposal remain hazy, there is one piece of the plan that has become clear: the part that could put more than $125 million into Trump’s own pocket each year.
The only specific number Trump has mentioned in two speeches on his tax reform proposal so far has been his goal for the corporate tax rate: 15 percent, down from the current 35 percent. And White House legislative director Marc Short confirmed Tuesday that Trump wants to extend that reduced rate to so-called “S” corporations, partnerships and limited liability companies.
“We are committed to extending it to small businesses. I think the details of that will be coming forward,” Short said at a Christian Science Monitor breakfast.
Those “small” businesses, though, can make enormous profits, as in the case of the dozens of “LLCs” owned by Trump. A HuffPost review of his 2017 financial disclosure statement shows Trump earned at least $551 million from those entities in the past year, a figure that represents the vast majority of his income. Discounting the golf courses and real estate entities with overseas assets ― which are presumably subject to taxes in those jurisdictions ― the total is $519 million.
Currently, LLCs and related entities are not taxed as formal corporations. Rather, their income is taxed on their owners’ individual returns. That maximum rate is 39.6 percent ― but would drop all the way to 15 percent under Trump’s proposal.
So how much would Trump save with that tax cut on a half-billion dollars in income?
“One hundred and twenty-five million. Just straight arithmetic,” said Roberton Williams, with the Tax Policy Center. “That’s assuming that the $500 million is all taxable income.”
The disclosure form Trump filled out labels the money from his various golf courses and real estate ventures “income,” not “revenue,” but does not specify whether it is “taxable” income, making it impossible to determine precisely how much Trump would personally benefit from his tax proposal.
Despite his original promise to release his returns if he ran for president, Trump has refused to do so. During his presidential campaign he said he would release his returns after the Internal Revenue Service completed a “routine audit.” After the election, Trump has taken to arguing that American voters don’t care about his tax returns, as they elected him president without seeing them.
Short on Tuesday returned to the campaign promise: “He’ll be happy to share his tax returns when the audit is completed.”
Government ethics officials who have criticized Trump for refusing to disclose his tax returns and failing to put his assets in a blind trust ― as presidents for the past four decades have done ― said Trump’s apparent interest in this one piece of tax reform is part of that same pattern.
“It’s not surprising that he would seem most focused on those tax changes that would benefit him personally,” said Jordan Libowitz of the watchdog group Citizens for Responsibility and Ethics in Washington. He, like Williams, pointed out that unless Trump discloses his tax returns, Americans have no way of knowing precisely how much his personal finances will be affected by what he is advocating. “We don’t know exact numbers. We don’t know specifics. When it comes to taxes, specifics are important.”