Yesterday, President Donald Trump went to Missouri to talk up his tax plan, and to dismiss any thoughts that the GOP tax plan might benefit him personally.
“This is going to cost me a fortune, this thing, believe me…This is not good for me,” the president said.
That’s a stretch, to say the least. While there are some elements in the plan that won’t benefit Trump that much, there are a lot of things he and his accountant should be able to take advantage of. One big help will be the change in how so-called pass-through businesses are taxed. Under the current law, pass-throughs are companies that don’t pay corporate income taxes, but instead pay at the individual income tax rate of the owner or owners of the company.
Both the Senate and House tax reform packages lower the current tax rate these businesses are taxed at. Well, at least some of those businesses.
If you are a small Main Street, mom-and-pop shop you might get a break under the GOP plan. But there’s a good chance it won’t make any difference at all. According to the Tax Policy Center, “Nearly 90 percent of pass-through owners already pay a tax rate of 25 percent or less (under current law). Thus, the 25 percent income tax rate cap on pass-through income would not benefit them at all.”
People who own pass-through businesses like hedge funds, or real-estate development and property-management entities, though, will almost certainly benefit a lot, since the GOP plan will sharply cut the tax rate they have to pay. Which means that despite Trump’s protestations, this tax plan will likely be very good for him.
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