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The GOP Tax Plan’s Mega Gift To Some of Trump’s Richest Appointees

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The GOP Tax Plan’s Mega Gift To Some of Trump’s Richest Appointees

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tax, Gary Cohn

Reprinted with permission from ProPublica.

There are times that you run across something that’s so preposterous that it’s hard to believe it’s true. But in this case, it is.

I’m talking about the multiple — and permanent — set of tax breaks that some of the Trump administration’s mega-wealthy appointees and their heirs stand to get if the estate tax repeal in the House Republicans’ tax bill becomes law.

The appointees I’m talking about are those with a net worth above $11 million (which is a lot of them) who sold assets that the Office of Government Ethics said would pose conflict-of-interest problems in their new gigs.

Combine the rules that cover such sales with terms of the proposed estate tax repeal, and these people get a multilevel, multigenerational bonanza. A gift that would keep on giving (and giving and giving).

I couldn’t believe what I was reading, and figured that I might be overly eager to uncover gifts to the ultra-rich in the House tax cut bill, which is by no means tax reform because it hurts millions of taxpayers in my home state of New Jersey and other places that aren’t reliably Republican, but bestows plenty of breaks on big businesses and the rich. So I asked tax expert Bob Willens of Robert Willens LLC, whom I’ve consulted for decades, to show me where I was making a mistake.

It turned out that Willens couldn’t believe what he was reading, either, when he parsed the proposed estate tax repeal provisions. “I had to read that about eight times,” Willens told me. “It defies description. It’s unheard of. It’s unbelievable.”

Now, let me show you why. And why mega-wealthy Trump appointees and their heirs would get level after level after level of tax goodies, even more than regular rich people would get.

Under Section 1043 of the tax code, enacted in 1989, eligible federal appointees (such as an energy secretary who owns oil stocks) who sell conflict-posing assets and reinvest the proceeds in something permissible, such as an index mutual fund, don’t owe any tax until the replacement asset is sold. At that point, they pay taxes on the total gain in, to use our example, the mutual fund they bought with the proceeds of the assets they had to sell. In other words, the only benefit they get under current law is a deferral in their capital gains taxes. They don’t get to permanently escape taxes.

I have no problem with this tax deferral, by the way. I don’t think people should have to shell out serious money in order to work for the government. If they happen to benefit by being able to diversify their portfolios on a tax-deferred basis, the way former ExxonMobil chief executive Rex Tillerson could diversify out of his Exxon stock and long-time Goldman Sachs executive Gary Cohn could diversify out of his Goldman holdings, that doesn’t bother me, either.

Besides, until now people who have gotten very large Section 1043 tax deferrals have been almost certain to be wealthy enough to trigger estate tax — no, it’s not a “death tax,” it applies to only about 1 in 500 estates — when they die. Some 99.8 percent of estates don’t pay tax because about $5.5 million of assets are exempt from estate tax for a single person, and about $11 million for a married couple.

Now, watch where the outrageous part comes in. Under current law, heirs have to pay estate tax based only on the value of the inherited assets on the day the person who bequeathed them died. They don’t have to pay a penny on the assets’ gains while the dearly departed owned them. (The adjustment is known as a “basis step-up” in tax jargon.) But of course, the estate has to pay estate tax of 40 percent of the amount by which the inherited assets exceed the $5.5 million/$11 million threshold. The tax-free basis step-up allows heirs to avoid having to pay both capital gains tax and estate tax on the assets they inherit, which strikes me as a reasonable thing.

However, under the Republican plan’s estate tax repeal, not only would heirs collect everything tax-free, but they would also get a tax-free basis step-up in the assets they inherit. By contrast, when the estate tax was repealed for a year in 2010 as part of the George Bush tax cut bill, the step-up in basis was largely negated, which stopped heirs from getting a mega-windfall.

I assumed that would be the case in whatever plan the Republicans proposed this time. In fact, I predicted that in a January article that I wrote with Cezary Podkul, then a ProPublica colleague, currently a Wall Street Journal reporter.

We felt that even if the estate tax were repealed, the heirs of Donald Trump’s appointees would be subject to capital gains tax when they sold the assets their benefactors had acquired to solve conflict-of-interest problems.

Besides, even Trump, who campaigned on eliminating the estate tax, wasn’t proposing that heirs get a totally free ride. He was proposing something — details of which were never made clear — that seemed to involve estates paying capital gains tax on unrealized gains above $10 million.

That idea of taxing estates in any way seems to have disappeared entirely from Trump’s public statements these days. And I realize now that I was naïve to think that Trump might ever promote anything that might cost him or his family any money.

To return to where I started, I’m just astounded by the multiple tax breaks Trump appointees and their heirs stand to get if the House version of estate tax repeal becomes law. So is Bob Willens, the tax expert.

“You get to diversify tax-free,” he said, a tone of wonder in his voice. “Then you get to bequeath your portfolio tax-free. And the most amazing part is that your heirs get to step up their basis in the inherited assets tax-free.”

A great deal for these people. A terrible deal for the rest of us, who would have to pick up the tab for it.

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17 Comments

  1. Dominick Vila November 12, 2017

    If hearing Trump brag about grabbing women by the genitalia and getting away with it, if seeing him doing the sword dance with the relatives and friends of the 9/11 Saudi terrorists did not bother us, if the people of Alabama are not ashamed of what Moore has been accused of and remain determined to vote for him even if the accusations are true, if seeing Trump chasing Putin to shake his hand while Vladimir was doing everything he could to avoid him did not cause an uproar in the USA, if hearing Trump tell Xi that he did not mind China taking advantage of the USA was met with indifference in the USA, if hearing Trump say that he believes Putin’s denials over the assertions made by our entire intelligence community does not shock us, if Trump interfering in the ongoing investigation by the special counsel does not bother his supporters, why should anyone be surprised or upset with the welfare for the rich the GOP is now proposing, and Trump can’t wait to sign into law to Make America Great Again? The debasing of our society has reached a point that there is nothing Trump can do or say that will shock us anymore, or result in our elected officials having the courage and integrity to impeach him and remove him, and his gang of thugs, from the White House.

    Reply
    1. dbtheonly November 12, 2017

      Good Morming Dom,

      Trump’s first interest always has been Donald J Trump. Nothing along those lines should be surprising.

      Republicans always have tried to sneak advantages for themselves into just about everything. Nothing along those lines should be surprising.

      Mr. Sloan has exposed many of those attempts & we can thank him for catching this one.

      But I’m still opposed to impeachment. Trump’s ignorance, inconsistency, & incompetence is one of the great barriers keeping the Republicans from implementing their agenda.

      Reply
      1. Dominick Vila November 12, 2017

        The alternative (Pence) is far more dangerous than Trump, inasmuch as opposed to his boss he is articulate, fairly intelligent, and has an ideological agenda that if implemented would take us back to the 1950s.
        As for Trump, let’s not forget what he said about 10 days ago, the only person that matters is himself! That’s malignant narcissism on steroids.

        Reply
        1. Lynda Groom November 12, 2017

          Indeed. The idea of Pence in the big boy chair scares the heck out of me. I suppoose the best we can hope for in the next three years is Trump neutered and playing with his twitter toy. Perhaps the professionals within government will just continue doing their jobs while trying to keep Trump agency appointees at arms length.

          Reply
        2. FireBaron November 13, 2017

          Nah, Dom. I don’t see Pence bringing us back to the 1950s. The 1650s maybe, because back then the Church could provide public punishment for crimes of Morality, and that’s exactly what a True Believer like Pence wants.

          Reply
    2. Tiffany November 13, 2017

      Google is paying 97$ per hour,with weekly payouts.You can also avail this.
      On tuesday I got a brand New Land Rover Range Rover from having earned $11752 this last four weeks..with-out any doubt it’s the most-comfortable job I have ever done .. It sounds unbelievable but you wont forgive yourself if you don’t check it
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      Reply
  2. Aaron_of_Portsmouth November 12, 2017

    What Divine irony we have being played out. The GOP in it drunken state of power-grabbing has given us Donald Trump and an pandemic of GOP fleas and ticks who hold most of the reins of power in America.

    As a result, Donald unwittingly, and unanticipated by the GOP, has helped expose the greed and extensive plans of the GOP to set up a combination autocratic plutocracy.

    This will set off a cascade of events, not at all beneficial in the long run for the GOP and for Trump—The Russian connection and Trump’s involvement; most of Trump’s Administration will have to suffer the consequences in one way or another; the GOP is exposed for all to see the ugliness of this devious organization; the rank hypocrisy of the Evangelical Wing of Christianity, along with a host of other religious groups who bow the knee to the GOP and to Trump, while further distancing themselves away from God.

    On the latter count, Christian hypocrisy on the part of Trump and all his supporters in and out of government circles, is being carefully watched and pondered on by billions of people across the planet. Not only has Christianity been irreparably tarnished by recent incidents of rape and sexual abuse cases by high-profile individuals in high places, but America’s political order has been exposed as one of the most corrupt in the world, alongside that of Russia, China’s political leadership.

    The GOP’s efforts to stiff Americans on the healthcare front and financially, further ensures that this is a Party destined to go up in flames, and guaranteed a spot in the annals of one of the most decadent system of governance humankind has witnessed.

    Keep shooting yourselves in the foot, GOP and friends, and don’t stop until you’ve completed the job.

    Reply
  3. FireBaron November 13, 2017

    Gee. Teflon Donnie’s tax giveaway to the Alligators and Cottonmouths he is using to fill the swamp. Who would have thought it possible?

    Reply
  4. Thoughtopsy November 13, 2017

    So Trump is ensuring him and his “loyal” friends all get massive tax breaks and make lots of money….
    Is ANYONE surprised?
    (Oh… except the Deplorables, of course.)

    Reply
  5. ivory69690@yahoo.com November 14, 2017

    as for the DUMP 45 tax plan trying to convince people that thy will be getting more money back and corporation company’s will get taxes breaks and that which will some how some stupid way make is so the middle class gets $4000 per year per person . as it is and pretty much always been is that corporation company’s make money thy never want or do give any of it back to anyone thy are the GREEDY RICH and like DUMP 45 only care about them self .. so as the gang of pinheads =GOP and DUMP 45 try to B/S every one more so the middle class and lower . its just their way of pulling off the DUMPD 45 favorite things fraud , con , and scamming . money for the greedy rich . the BULL talking of these clowns is a sad joke but still a joke

    Reply
  6. ivory69690@yahoo.com November 14, 2017

    .telling the country that this tax plan will make the middle class wages go up . in fact thy was given a time where thy could of helped the middle classes wages to go up and thy didn’t do it . the time when it was being said to raise the min. wage to $15 per hour . now that would be truly helping the middle class with more money . BUT NO WAY THY SAID !

    Reply
  7. ivory69690@yahoo.com November 14, 2017

    comes a point in time when it these DUMP 45 CLOWNS and his CULT of GOP idiots want to really help the middle class try it this way for once try giving the middle class the money you say thy all will make give it to them FIRST FOR A CHANGE SHOW YOU TRULY MEAN IT GIVE US SOMETHINMG TO BELIEVE ! just once for a change . then it wouldn’t be the DUMP 45 CLOWN & GOP getting it first on their as always fraud ,con & scam mode . . the way thy Always want it . give to us and you will see . that sight is never happing . thy gets theirs and the HELL with the American people . until the next time of their promises when thy once again try and more then likely get away with their fraud ,con ,& scam again . the only reason why the DUMP 45 CLOWN & THE GOP want more money is to only give it you the greedy rich that’s all the hell with the middle class and those people even lower them self’s

    Reply
  8. ivory69690@yahoo.com November 14, 2017

    how much more BULL has to come out about all the DUMP CULT , KLAN , STAFF & anyone else that works on that crooked side of the country . between all the hacking from Russia to his own brain washed children . his son every day has more things coming up about him and his dirty sneaky games he played (just like bad old DADDY DUMP 45 ) all tied in with all the Corruption from WikiLeaks all at the heart of the BULL going on in the DUMP 45 rotten house . these days if be it that Hillary was in the white house (and by rights she should be ) if it be even half of the BULL going on now with DUMP 45 house . the GOP would be going nuts . thy would be having her thrown out of the house with all these FACTS on DUMP 45 . the thing on Hillary was all BULL the GOP made up to screw her up and while doing that screwing up the country and the world even . all that was there about Hillary was made up all that is there today on DUMP 45 is facts . OHH how the GOP wishes thy had facts on Hillary . thy have to make up all their BULL on her . years ago the GOP had started all this BULL on Hillary .. with all this coming out on Rot Moore these women that DUMP 45 sexual assaulted and all knows there are many more then just 12 . hopefully thy will start coming out and letting be known how much a slim scum the perverted DUMP 45 truly is !.

    Reply
  9. ivory69690@yahoo.com November 14, 2017

    an absolutely not-made-up dossier on Trump’s early years so much of it is fact proven now and at the end it will all be proven !!

    Reply
  10. ivory69690@yahoo.com November 14, 2017

    the new thing with Session that’s going on will more then likely be a cause of him being fired . then DUMP 45 will get a new puppet like Sessions in there so DUMP 45 can get Mueller fired to trying to save his sorry but . but this time DUMP 45 will make his ne puppet do his bidding . but this time DUMP 45 will add one of his snaky tricks and try to get away with it by making Mueller give up every thing he has on all the cases and investigations EVERY THING and say something stupid that pretty much only his brain dead DUMP 45 followers would believe and more then likely some GOPS also . . DUMP 45 will try his BULL saying im going to take all Mueller’s information and im going to have a better staff that I choose to look into every thing and ill get to the bottom of this all myself . then the clown will say a moron statement like im the only one in the world that can get to the bottom of this saying im the only Trustworthy person that can get to the truth . then he will either say OMG some how all those Mueller records were stolen or lost ! then saying and I saw just ready to give every one all the answers thy wanted the truth as only I DUMP 45 could of found it . or he would say well my crack (POT ) team has went over every thing with a fine tooth comb and found out the truth on every thing and it my pleasure to tell the world that I was right all the time about every thing ! and then for more junky attention the DUMP 45 clown will say something like while doing my own investigation getting so much more information then Mueller could of ever gotten im now open another investigation on Hillary and Obama saying that those 2 names came up in his investigations with his crack (POT ) investigators and he is now going to look into it and find more of his so called truth . then saying something like NO OE CAN DO THIS LIKE DUMP 45 CLOWN CAN !!! and this will be the attention the addicted junky will get for his latest junky FIX !!

    Reply
  11. ivory69690@yahoo.com November 14, 2017

    the washing post hits the DUMP 45 nail on the head with this ?>>>The clown goes abroad

    Reply
  12. ivory69690@yahoo.com November 14, 2017

    what’s more important still investigating Hillary these days after all the time & money that’s been wasted already And nothing was found . or is it more important to be doing investigation today on all DUMP 45 ties to Russia and all the BULL between hacking and all the other seeming corruptions from a long time before the running of the election by DUMP 45 and things are found every other day on DUMP 45 up to today the reason looks more like he could not have made it in the white house DUMP 45 owes his Russian B/F PUTTHEAD for all the help that was needed for him to win for DUMP 45 could not have done it on his own . only DUMP 45 win come with his kind of fraud con and scams THAT’S IT AND THE ONLY REASON WHY THIS POS DUMP 45 CLOWN IS IN THE WHITE HOUSE .

    Reply

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