WASHINGTON — President Donald Trump and his Republican partners in a nearly $6 trillion tax-cutting plan insist it would benefit middle-class Americans and not the wealthy. But a key provision would slash tax rates for a special kind of business set up by owners of profitable firms, including Trump and his family.
The GOP tax blueprint would cut rates for businesses whose profits are taxed at the owners’ personal income rate, with proponents casting it as tax relief for small business. Known as “pass-through” companies because their profits are pipelined into the owner’s personal tax bucket, those businesses span a huge range, from the local florist and family-owned restaurant to law firms, hedge funds and privately held large firms such as real estate companies — and Trump’s own property empire.
Instead of paying the current top rate of 39.6 percent, owners of these businesses would be taxed at 25 percent under the GOP plan. That would deliver a substantial windfall to Trump’s daughter Ivanka and her husband, Jared Kushner, who have reported holding stakes in more than 200 limited liability companies, or LLCs.
One example is a cluster of LLCs involving the historic Puck Building in Manhattan, a property that Kushner’s family bought when he was 5. Kushner, who helped add penthouses, made more than $5 million from the companies last year.
Trump himself owns about 500 entities structured as pass-throughs, according to his lawyers, making the Trump Organization less a single business than a grab-bag of units drawing on the fancier parts of the tax code: sole proprietorships and limited liability partnerships. Unknown at this point is how much Trump would gain, because he hasn’t disclosed how much he pays in taxes.
With the release of the tax plan last week, Trump maintained that the rich won’t capitalize and neither will he.
“No, I don’t benefit. I don’t benefit. .... I think there’s very little benefit for people of wealth,” the president said.
Oregon Sen. Ron Wyden, the top Democrat on the Senate Finance Committee, begged to differ.
“There is in the Republican plan a brand new pass-through proposal that invites tax cheats to skip out on paying their fair share,” he said in a Senate speech Wednesday.
But House Speaker Paul Ryan, one of the chief architects of the tax plan, said in an interview with radio station WISN in his home state of Wisconsin that 90 percent of businesses in the state are pass-throughs.
“And these businesses in Wisconsin are competing in a global economy ... so we’re taxing these businesses in our economy at double the rates” of other industrial countries, Ryan said.
Small business is a cherished touchstone of Republican politics, a pillar of small-town Main Street and the Rotary Club where everyone knows the local proprietor. And the new tax proposal, which deeply reduces levies for corporations and nearly doubles the standard deduction used by most Americans, pays homage.
“Small businesses drive our economy and our communities, and they deserve a significant tax cut,” the blueprint says.
Democratic lawmakers are raring to set out new restrictions and protections against abuse of the lower tax rate for pass-through companies. They want to write the protections into the tax legislation. Republicans could be looking to head off stricter protections by putting forward their own and getting them written into law.
“We have spent an enormous amount of time on the anti-abuse language,” Gary Cohn, Trump’s chief economic adviser, told reporters at the White House last week. “The last thing we want to see is wealthy individuals or wealthy groups or families move their tax rate down ... to the 25 percent rate.”
No specifics yet. But Cohn offered that, “guys like myself should not be allowed to put their assets into a partnership and reduce our tax liability by 10 percent.”
Cohn, who rose at Wall Street powerhouse Goldman Sachs to become its president before he came to the White House, is one of the administration’s wealthiest members. He received at least $40 million in income last year from Goldman-related dividends, interest, salary and bonuses, about half of which came in the form of stock compensation, according to his financial disclosure filings.
Rep. Richard Neal, the top Democrat on the tax-writing House Ways and Means Committee, promises to focus on preventing potential abuses of the special tax structure. Is he convinced by the White House effort?
“I’ve yet to see evidence of it,” Neal said in an interview. “They’ve said in a very general way, ‘We can build these walls.’ I want to see that.”
But Rep. Steve Chabot, an Ohio Republican who heads the House Small Business Committee, is unfazed. “We need to be mindful of (potential abuses) when we’re putting this bill together,” he said. “But for most small business folks, it will have a significant, positive impact.”
Small businesses are divided about the Republican proposal.
“That’s not a very targeted way to benefit most small businesses,” said John Arensmeyer, CEO of Small Business Majority. The proposed rate cut wouldn’t help most small companies, he said, because the top current rate of 39.6 percent is paid by less than 2 percent of them.
Still, other small business advocates — the National Federation of Independent Business and the Small Business and Entrepreneurship Council — support the proposed rate reduction.
QUEENSBURY — Yolanda Gonzalez has yet to talk to her mother, who is in hurricane-battered Puerto Rico, but at least she knows she is safe.
“I did manage to contact a cousin who lives on the northeast part of the island, and he told me he was able to go to Lajas and check on family members,” said Gonzalez, who has lived in Queensbury for about a decade. “He saw my mom, and said the family members were OK. They suffered little to no damage on their homes, just said that they are like the rest of the island dealing with lack of food, water and gas.”
The news that her relatives were safe came as a relief, because Gonzalez had not heard from them for two weeks after the Sept. 20 hurricane.
Her cousin told her many supermarkets have opened, but their shelves are mostly empty.
Gonzalez has tickets to fly to the island later this month, and at this point Jet Blue is telling her the flight, which had been canceled, is back on.
She has sent care packages to her relatives, but has not heard whether they have arrived. As a former postal worker, she is not surprised.
“Things are probably really crazy, worse than the Christmas season, and with many employees not even able to make it in and lack of sorting machines even working is going to cause chaos,” she said. “I am crossing my fingers and praying it gets to her soon, and she has the gas to even get it as the post office is several towns away.
“It has just been difficult not hearing directly from her,” Gonzalez said. “I find myself physically and mentally drained.”
MOREAU — The Hudson Falls teen who was arrested this week in connection with the Aug. 31 crash that killed a 16-year-old admitted drinking alcohol and smoking marijuana in the hours before the crash, court records show.
A friend of driver Christopher R. Miranda, 18, told State Police that Miranda “obviously had been drinking too much” when he saw him about five hours before the crash that killed 16-year-old Zachery Brown and seriously injured a 14-year-old passenger, court records allege. That friend said he took a car key away from Miranda because of his condition.
The records also show that Miranda told police that a deer ran in front of his car when he was driving about 55 mph, causing him to swerve and lose control of his girlfriend’s Chevrolet sedan. The vehicle crossed a home’s front lawn and hit several trees, trapping Brown inside the car’s back seat.
Miranda was charged Monday by State Police with vehicular manslaughter, vehicular assault, aggravated driving while intoxicated and issued numerous traffic tickets for the crash on Bluebird Road. The charges came after a test found his blood alcohol content was 0.12 percent following the crash, court records show.
Miranda, who suffered minor injuries in the crash, told troopers that he had been hanging out near the Fenimore Bridge with friends in the hours before the crash, and that he was taking Brown to his home in South Glens Falls when the fatality occurred.
“We hang out at the bridge often and party there,” Miranda is quoted as saying.
Miranda told police he had a “few puffs” of marijuana and about a quarter of a can of Four Loko, an alcoholic malt beverage, at the bridge.
“I did smoke some weed and drank some alcohol but I don’t think that I am that messed up,” Miranda told police.
However, written statements to state troopers and State Police investigators from more than a dozen witnesses who interacted with Miranda and Brown in the hours before the crash show that Miranda’s drinking and alcohol use stretched back to around 6 p.m. the night before.
They include three people who said they smoked marijuana with Miranda in the hours before the crash, and at least two who said they saw him drinking Four Loko. Brown had also been drinking vodka, the statements show. He stopped by his sister’s home in Glens Falls to smoke marijuana that he brought with him, according to witness statements.
Miranda stopped by the River Street, Hudson Falls, home of friend Mark A. Planty around 12:30 a.m. Aug. 31, and Planty said he could smell alcohol on Miranda from several feet away.
“When Chris got to my house, he had obviously been drinking too much,” Planty told police, court records show.
Planty said he took Miranda’s car key away and went to bed about an hour later. But Miranda later left in the vehicle without the key, though it was unclear how.
The crash happened around 5:30 a.m. Bluebird Road property owner John Fish, whose front yard the car careened into, told police that the young man who had been driving said “I shouldn’t have been going so fast” moments after the crash.
Numerous witnesses speculated to police as to how Miranda and the other teens came to get alcohol, pointing the finger at a number of people who they claimed had provided alcohol for them in the past. No one had been charged with providing it to them as of Wednesday, though.
Miranda was arraigned Monday and sent to Saratoga County Jail for lack of bail. He is due back in court Thursday morning. He is being represented by the Saratoga County Public Defender’s Office, which has not returned phone calls for comment.