Trump’s richest friends are asking for changes to the GOP tax plan, and he’s listening
Some of President Trump’s wealthiest New York friends have launched a last-minute campaign to pressure him for changes to the GOP tax bill, telling the president personally the current plan would drive up their taxes and hurt his home state.
Trump on Saturday attended a fundraiser at the home of Stephen Schwarzman, chief executive of the Blackstone Group and the former leader of Trump’s now-disbanded White House Strategy and Policy Forum. Longtime Trump friend Richard LeFrak, a New York real estate magnate who Trump has said would play a lead role in his infrastructure push, also attended.
At the fundraiser, LeFrak asked Trump about changes in the tax bill that could help wealthier New Yorkers, people familiar with the exchange said. At least one other donor jumped in to echo the concerns, according to the people.
Economy & Business Alerts
Breaking news about economic and business issues.
In response, Trump told the group he was aware of the concerns among his old friends and business associates — and that he understood them.
“The president was a little vague in his response on that,” an attendee at the fundraiser said, saying Trump said “‘Well, we’ve got to see what happens. Maybe there are ways to try to be helpful.’”
Many of Trump’s friends have complained that a proposal in the House and Senate tax bills limiting the tax breaks people can claim would drive up taxes on people in New York. Specifically, they have raised concerns about new limitations on their ability to deduct state and local taxes.
A White House official said Trump has not asked Congress to make specific changes to the bill relating to the issue that came up in New York, but the president has signaled publicly he’s open to making adjustments.
“There are very, very few people that aren’t benefiting by [the tax package], but there’s that tiny little sliver, and we’re going to try to take care of even that very small group of people that just through circumstances maybe don’t get the full benefit of what we’re doing,” Trump said Wednesday at the White House.
Trump did not offer details about whom he considers to be a part of that “very small group of people.”
LeFrak is part of a small but very influential cadre of New Yorkers who are trying to press Republicans in Washington to make these last-minute changes. Paul Singer, founder of the hedge fund Elliott Associates, has also made his views known to Republicans, though not directly to the White House.
Kathy Wylde — who leads the Partnership for New York City, a major business advocacy group — has called executives and others to build momentum against the changes. A number of business executives in New York have called Trump and his Cabinet, White House advisers say.
“They’re killing the goose that lays the golden egg,” said Wylde, adding the tax changes are hardest on “high earners” and “global commercial centers” that the economy needs to be successful.
The people describing the conversations spoke on the condition of anonymity to share details from the private event.
Schwarzman has been a longtime friend of Treasury Secretary Steven Mnuchin, and Mnuchin was at the Saturday fundraiser. Mnuchin, a top Trump adviser on taxes, attended Schwarzman’s birthday party in Florida earlier this year, along with other senior Trump aides.
LeFrak and Trump have been friends for decades, with LeFrak at one point serving as a judge in the Miss Universe pageant that Trump ran and also making an appearance on Trump’s television program, “The Apprentice.”
Republicans are trying to balance a number of demands as they work to complete discussions between the House and Senate and agree on a single tax bill that they can pass and send to the White House for enactment. Trump wants to sign the bill into law before Christmas, but there are still several issues to iron out.
Trump had for weeks tried to couch the tax bill as a big boon for the middle class and one that would provide little benefit to the wealthiest people in the country.
But numerous tax analysts expressed skepticism that this would be true and several have said Trump would likely be a big beneficiary because of the way the Trump Organization is structured.
The House and Senate bills would lower the corporate tax rate from 35 percent to 20 percent and lower taxes that partnerships and sole proprietors pay on their earnings. The bills would also lower the tax rates that many Americans pay on their earnings, though the rates would fall little or be unchanged on large amounts of income.
Still, the bills were designed in a way that provided many benefits to the wealthy, scaling back the alternative-minimum tax, scaling back the estate tax, and lowering taxes on business income.
In order to offset some of these costs, the tax bills would make a number of changes that could limit tax breaks on the wealthiest Americans.
For example, the House and Senate tax bills would allow Americans to deduct only $10,000 in local property taxes from their federal taxable income. That’s enough to cover the taxes that most Americans pay, but not the wealthiest. It also would not allow Americans to deduct the state income taxes, a change from current law that could hit people in high-tax states like New York, New Jersey, and Connecticut particularly hard.
There are also growing complaints about potential changes to accounting rules in the tax bills that could require investors to follow a process called “first in, first out,” which could force them to sell investments in a way that drives up their tax liability.
In order to address some of the concerns raised by wealthy New Yorkers, Republicans have looked at lowering the tax rate on the top income bracket, but so far no decisions have been made.
The complaints offer a much different perspective from wealthy New Yorkers than the one Trump has described during his push for changes. In October, Trump said his rich friends were praising the tax package, not complaining about it.
“It’s a middle-class bill,” Trump said then in Harrisburg, Pa. “That’s what we’re thinking of. That’s what I want. I’ve had rich friends of mine come up to me, and say, ‘Donald, you’re doing this tax plan — we don’t want anything. We don’t.’”
House and Senate lawmakers have begun a “conference” committee to try to resolve differences between the tax bills and hope to reach a resolution by next week.
They are now looking at moving the corporate tax rate up to 22 percent to free up revenue to cover changes, including some that could potentially ameliorate the concerns of wealthy Americans in New York.
Republicans are contemplating moving the corporate tax rate from 20 percent to 22 percent to free up more revenue so they can put a number of other tax cuts into the package.
But there is tremendous pressure within the Senate to keep the corporate rate at 20 percent, in part because of fears that allowing it to rise would prompt a flood of lawmakers demanding additional changes.
And if changes are made that would benefit wealthy New Yorkers, it could further fuel criticism of the bill that it is tilted too much toward corporations and the wealthy and offers only short-term benefits for the middle class.
