Sunday, December 17, 2017

How Did Trump and His Son-in-Law Make Out in Tax Reform?

Donald Trump, Ivanka and son-in-law Jared Kushner.

Pretty much better than everyone else.

The New York Times explains:
Numerous industries will benefit from the Republican tax overhaul, but perhaps none as dramatically as the industry where Mr. Trump earned his riches: commercial real estate. Mr. Trump, along with his son-in-law Jared Kushner, who is part owner of his own real estate firm, will benefit from lower taxes on so-called “pass through” income, which is money earned by partnerships and other types of businesses whose income is passed through to its owner and taxed at the individual tax rate. Mr. Trump and Mr. Kushner benefit since they own properties through limited liability companies and other similar vehicles.

Under current law, that income is taxed at rates as high as 39.6 percent. Under the bill, much of that income could be taxed at a rate as low as 29.6 percent, subject to some limitations. Real estate also avoided new limits on interest deductions and retained its ability to defer taxes on the exchange of similar kinds of properties. The benefits of lower rates on pass-through income will extend to Mr. Trump and Mr. Kushner’s partners at real estate investment trusts as well. At the last minute, lawmakers added language to make it easier for real estate owners to avoid some of the pass-through provision’s restrictions and maximize the tax benefits even more.

So where was the tax burden shifted to? The states that did not vote for Trump:
Homeowners in high-tax states like New York, New Jersey and California could be big losers, particularly if they have high property taxes. Their ability to deduct their local property taxes and state and local income taxes from their federal tax bills is now capped at $10,000. 


1 comment:

  1. Actually, small entrepreneurs like me are likely to get hammered by the new tax bill.