BUSTED: Senator Orrin Hatch Admits He Wrote Controversial Tax Provision That Benefits Trump And Sen. Corker
Sen. Orrin Hatch (R-Utah) on Monday admitted he wrote a controversial tax provision, which personally enrich President Donald Trump, Sen. Bob Corker, House Speaker Paul Ryan, and top Republican lawmakers directly overseeing the bill, the International Business Times reports.
The provision also benefits the real estate industry — which has been one Hatch’s largest sources of campaign donations, according to IBTimes.
In his letter explaining the situation, Hatch did not dispute that Corker and other Republicans who have large ownership stakes in real-estate-related LLCs stand to reap a personal windfall from the legislative language he added to the final bill. Instead, Hatch insisted the controversial provision wasn’t new, but was in fact included in the version of the bill passed by the House earlier this month.”
Hatch’s characterization of the provision was disputed by tax experts Monday, who said the Republican senator’s process argument was factually false.
“Chairman Hatch’s letter is an exploration of an alternative tax universe not previously known to science,” Edward Kleinbard, former chief of staff of Congress’s Joint Committee on Taxation, told IBT.
“[The provision’s] only connection with the House bill is that it rewards owners of capital intensive businesses, like wealthy real estate investors, but the measure of those rewards and the new provision’s design have no relationship to the House bill,” said Kleinbard, currently a law professor at the University of Southern California.
Earlier this month, Corker cast the lone Republican “no” vote on the Senate version of the bill, which did not include the provision, but instead created a 20 percent deduction on income from “pass-through” entities, such as LLCs and S-Corps, that pay out wages to employees. But Friday, he announced he would vote “yes” on the final reconciled bill, which included the controversial new provision.
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Seth Hanlon, a former Obama administration adviser on the White House National Economic Council, said Hatch’s argument strained credulity.
“When they say ‘capital-intensive taxpayers,’ they mean passive, wealthy investors that own valuable assets but don’t employ many people,” he told IBT in an email. “When they say ‘prove-out,’ they mean a special trap-door from limits on the new passthrough loophole that allows wealthy real estate magnates to get an even bigger tax break. This special trap-door was not in the Senate bill that Corker voted against. And ironically, the Senate bill based the design of its passthrough loophole and the so-called ‘wage guardrail’ on a bill from then-House Majority Leader Eric Cantor that the House passed in 2012. That bill did not have this special trapdoor for wealthy owners. This is a new provision added to the bill, and not unveiled until Friday night.”
Hanlon also asserted that the Republicans were trying to use an arcane process argument to deliberately distract attention from how Corker and other lawmakers will personally benefit from the provision.
“It’s telling that Republicans are not even trying to defend this carveout on its merits,” he told IBT. “And that’s because it’s an indefensible giveaway to people like Bob Corker and Donald Trump. It is a special, new tax break that goes to rich investors, tilting the tax code in their favor and away from people who work for a living. And it’s one of the ugliest parts of a bill that raises health care premiums, raises taxes on millions of Americans, and explodes deficits.”
Experts estimate Corker could save as much as $1.1 million because of the tax break.