Rebekah Entralgo at Think Progress has an important story exposing one of the more blatant and outrageous scams in the nation’s new tax law that was enacted by President Trump and congressional Republicans last December. You won’t be at all surprised to learn that a loophole sold as a break for “small business” has actually turned out to be a giveaway to the richest Americans. This is from “Wealthiest Americans poised to take advantage of loophole left by GOP tax plan”:
“The non-partisan Joint Committee on Taxation released a report Monday detailing the effects of the GOP tax bill, ahead of a Tuesday Senate hearing on the same subject.
The findings indicate that nearly 44 percent of the tax cuts for so-called pass-through businesses will go to tax filers making more than $1 million in 2018, while more than 90 percent of the cuts will go to those earning more than $100,000.
As ThinkProgress previously reported, even though Republicans repeatedly claimed their tax plan would provide cuts for small business owners, pass-through businesses are not small businesses in the mom-and-pop sense, but rather are entities like partnerships, S-corporations, and limited liability companies (LLCs).
The final version of the GOP tax bill transformed the pass-through tax break into a deduction against taxable income, effectively cutting the top rate on pass-through income down from 39.6 percent to 29.6 percent.
This provides top pass-through earners — such as hedge fund owners and lawyers — with an enormous loophole, allowing them to effectively re-characterize parts of their income to pay taxes at a rate 10 points lower than what they are currently paying.”
The story goes on to explain that the tax break will also benefit multiple members of Congress as well as Trump himself and his son-in-law Jared Kushner. Between the two of them, Trump and Kushner could realize and annual tax cut of $40 million.
Meanwhile, the story reports that average Americans aren’t faring quite as well as the rich.
“The non-partisan Tax Policy Center found that top 1 percent will get an average cut of $1,022,120, while the middle 20 percent will get an average cut of $420.
The public has appeared to catch on to the scam. A Monday Gallup poll found that a majority of Americans, from both sides of the aisle, aren’t sure if their taxes have gone up or down.”