The Center for Public Integrity reported in January 2020 that congressional Republicans financially profited from the 2017 Tax Cuts and Jobs Act that they drafted and voted into law. The legislation, which provided sweeping tax cuts for corporations, real estate companies, and investment vehicles, handed out $150 billion in tax savings the following year.
Those who advocated for the bill claimed that it would benefit ordinary middle-class Americans with an increase in jobs and higher wages. However, corporations used the legislation for their own benefit, while wealthier congresspeople avoided paying thousands of dollars in taxes. Moreover, the tax cut is likely to cause an increase of some $1.9 trillion in the national debt over the next decade.
Stock prices also increased. As a result, congressional Republicans saw a significant boost in the value of their portfolios. For example, Apple’s stock prices rose in October 2018, jumping to 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 through ownership of mutual funds and a limited liability corporation (as well as a “blind trust” worth between $1 and $5 million). All but one of the 47 Republicans on the three key Congressional committees that controlled the drafting of the tax bill owns stocks and mutual funds.
Adding to the Congressional Republicans’ windfall was a newly created twenty percent deduction for income from “pass-through” businesses, or smaller, single-owner corporations. These businesses don’t pay corporate tax and shift profits to investors and shareholders. At least 22 Republicans in Congress have interests in such corporations. Real estate also benefited greatly from the Tax Cuts and Jobs Act. As Ed Kleinbard, an alumni of the Joint Committee on Taxation explained, “If you are a real estate developer, you never pay tax.” An addition to the bill featured a provision that can allow real estate companies to give a twenty percent deduction. Out of the 47 Republicans responsible for drafting the bill, nearly 29 held real estate interests at the time.
Senator Elizabeth Warren of Massachusetts introduced the Anti-Corruption and Public Integrity Act in 2018 to combat conflicts of interests. If ratified, lawmakers would lose the ability to own stocks and invest in corporations.
As of February 6th, 2020, apart from a cross-publication of Carey’s original Center for Public Integrity article on Vox.com, the American corporate news media has not covered this story.
Source: Peter Carey, “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/.
Student Researcher: Cale Carpenter (North Central College)
Faculty Evaluator: Steve Macek (North Central College)