In January 2020 the Center for Public Integrity and Vox reported that the 2017 Tax Cuts and Jobs Act, which granted corporations a 14 percent reduction in taxes, also helped Republicans in Congress who own shares in those corporations reap huge financial rewards. Although Republicans “sold the bill as a package of business and middle-class tax cuts that would not help the wealthy, the cuts likely saved members of Congress hundreds of thousands of dollars in taxes collectively, while the corporate tax cut hiked the value of their holdings,” Peter Cary of the Center for Public Integrity reported. Democrats in Congress also benefited, but none of them voted for the legislation.
The Act doled out nearly $150 billion in corporate tax savings in 2018 alone. Because the tax cuts were not “paid for” with corresponding reductions in government spending, the move will likely cause an increase of some $1.9 trillion in the national debt over the next decade.
In the months after the tax cuts were passed, stock prices soared. As a result, congressional Republicans saw a significant boost to the value of their portfolios. For example, Apple’s stock prices rose in October 2018, jumping 37 percent. Representative Mike Kelly of Pennsylvania and his wife own stock in the tech giant and many other companies; the total value of their investments is at least $439,000. Likewise, Representative Orrin Hatch of Utah and his spouse’s assets are worth between $562,000 and $1.43 million, and include ownership of mutual funds and a limited liability corporation (as well as a “blind trust” worth between $1 million and $5 million). All but one of the 47 Republicans on the three key congressional committees that controlled the drafting of the tax bill own stocks and mutual funds.
Adding to the congressional Republicans’ windfall was what Cary called the Act’s “crown jewel,” a newly created 20 percent deduction for income from “pass-through” businesses, or smaller, single-owner corporations. These businesses do not pay corporate taxes and they shift profits to investors and shareholders, who are only taxed at lower, individual rates. At least 22 of the 47 members of the House and Senate tax-writing committees have investments in pass-through businesses.
Real estate developers and investors also benefited greatly from the Tax Cuts and Jobs Act. Cary quoted Ed Kleinbard, the former chief of staff of the Congress’s Joint Committee on Taxation, as saying “[i]f you are a real estate developer, you never pay tax.” An addition to the bill featured a provision that allows real estate companies with relatively few employees to take the 20 percent deduction usually reserved for larger business with a sizeable number of employees. Out of the 47 Republicans responsible for drafting the bill, at least 29 held real estate interests at the time of its passage.
Over the past year, taxes were not the only legislative issue in which decisions were potentially influenced by the financial interests of members of Congress.
Members of the US Senate are heavily invested in the fossil fuel companies that drive the current climate crisis, creating a conflict between those senators’ financial interests as investors and their responsibilities as elected representatives. According to a September 2019 Sludge investigation by Donald Shaw, 29 senators and their spouses hold between $3.5 million and $13.9 million worth of stock in 86 fossil fuel companies, including well-known giants like ExxonMobil and Royal Dutch Shell and “a range of lesser known companies that specialize in pipeline operations, natural gas exports, and oilfield services.”
Shaw’s report was based on the senators’ personal financial filings as of August 16, 2019. According to the US Energy Information Administration, fossil fuel combustion accounted for about 76 percent of the greenhouse gases emitted in 2017.
Joe Manchin, a Democratic senator from West Virginia, where coal mining is a major business, has millions invested in coal. Shaw found that Manchin owns between $1 million and $5 million worth of non-public stock in a family coal business, Enersystems. Manchin’s 2018 financial disclosure reported that he earned between $100,001 and $1 million in dividends and interest from Enersystems, in addition to $470,000 in “ordinary business income.”
Manchin is the senior Democrat on the Senate’s Energy and Natural Resources Committee, which oversees legislation on energy resources and development, nuclear energy, federal coal, oil, and gas, and other mineral leasing, among other issues. If Democrats take control of the Senate in 2020, Manchin is in line to chair the Committee.
Manchin was the only Democrat to vote against protecting the Arctic National Wildlife Refuge from oil drilling in 2017. Manchin also voted to approve construction of the Keystone XL oil pipeline.
Jerry Moran, the Republican junior senator from Kansas, is likely the largest senatorial investor in ExxonMobil. Moran owns between $102,003 and $280,000 worth of ExxonMobil stock. He has stated that he does not believe that human activity has any effect on climate change.
ExxonMobil has known since at least 1977 that burning fossil fuels contributes to global warming, but the company suppressed that information for decades and worked to sow confusion over the scientific evidence for climate change in service of its bottom line, as Shaw’s report documented in detail and as Project Censored has previously reported.
Although the corporate media, including CBS News, have provided some critical coverage of the 2017 Tax Cuts and Jobs Act and its impacts, the report by the Center for Public Integrity and Vox is distinctive in having analyzed the financial disclosure forms of the lawmakers who drafted and voted for the legislation to show how they profited from it personally. Corporate news outlets have not covered this important aspect of the story.
In addition, despite the significant conflicts of interest exposed by Donald Shaw’s reporting for Sludge, the alarming facts about US senators’ massive investments in the fossil fuel industry appear to have gone completely unreported in the corporate press.
Peter Cary, “Republicans Passed Tax Cuts—Then Profited,” Center for Public Integrity, January 24, 2020, https://publicintegrity.org/inequality-poverty-opportunity/taxes/trumps-tax-cuts/republicans-profit-congress/; also published as “How Republicans Made Millions on the Tax Cuts They Pushed through Congress,” Vox, January 24, 2020, https://www.vox.com/policy-and-politics/2020/1/24/21078559/republicans-tax-cuts-congress-profits.
Donald Shaw, “Facing Climate Crisis, Senators Have Millions Invested in Fossil Fuel Companies,” Sludge, September 24, 2019, https://readsludge.com/2019/09/24/facing-climate-crisis-senators-have-millions-invested-in-fossil-fuel-companies.
Student Researchers: Cale Carpenter (North Central College), Chris Valenzuela (College of Western Idaho), and Christopher Rodriguez (Sonoma State University)
Faculty Evaluators: Steve Macek (North Central College), Anna Gamboa (College of Western Idaho), and Peter Phillips (Sonoma State University)