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How a Reporter Got a Corker of a Scoop About the GOP’s Tax Bill

At first David Sirota thought there was no hidden story behind the Republican tax bill. Then a tax lawyer called — it turned out there was plenty to reveal, thanks to the last-minute addition of a special loophole.

Bill Raden

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Photo: U.S. Senator Bob Corker (R-TN)

Senator Corker’s defense was, “I didn’t know about the provision because I didn’t read the bill that I’m voting for.”


As the House and Senate moved toward approving the final version of the GOP tax bill, the International Business Times (IBT) revealed in an explosive story Friday that a loophole slipped into the bill in the final minutes will directly enrich President Donald Trump and his son-in-law Jared Kushner, as well as wealthy senators and key members of Congress, including the provision’s writers.

Controversy swirled around the timing of the measure and the fact that deficit hawk Senator Bob Corker of Tennessee abruptly switched his vote in favor of the bill, whose tax cuts the Congressional Budget Office estimated will add $1.4 trillion to the deficit by 2027. Corker had been the lone Republican holdout in the Senate and had previously voted with Democrats against the bill. He has millions of dollars invested in real estate-related limited liability companies (LLCs) that could see a $1.1 million payday from the loophole. David Sirota’s IBT reporting quickly went viral as Corker’s apparent cushy accommodation was splashed across social media under the hashtag #CorkerKickback.

Capital & Main spoke to Sirota for a blow-by-blow account of the developing story, its implications and its consequences.

IBT had been closely following the debate over how the tax measure would treat income passed through a tax shelter known as an LLC, a “pass-through” tax entity because profits pass through to its owners who report them on their personal tax returns. The Senate version had limited tax cuts to pass through LLCs that actually employ people — the “job creators.” The House version has been far broader.

“We took a look at the key tax writers on committees that oversaw the bill as well as leadership,” Sirota said. “And we got a list of their real estate-related LLCs, and a day before the final bill came out, we put together this story about who could benefit. We found that between the conference committee, the Ways and Means Committee, the Finance Committee and the two leaders of the House and Senate, there were 13 members of Congress who owned and were earning income from real estate or from real estate-related LLCs. And depending on whether the final tax bill adopts the House version or the Senate version, they would stand to make a lot of money.”

IBT reported that the members of Congress — including House Speaker Paul Ryan — have between $36 million and $163 million invested in real estate-related LLCs. Between $2.6 million and $16 million in “pass through” income from those investments would benefit from the new provision.

Which version of the pass through would end up in the final tax bill would be determined by the joint House and Senate conference committee. At 5:30 p.m. on Friday, the committee released a final version that appeared to follow the Senate approach, the more rational version, according to tax experts Sirota spoke to.

“At 5:45 we were sort of like, ‘Okay, I don’t think there’s much to really write,’” Sirota said. “‘It looks like they kind of got it out.’ But I said, ‘I’ll talk to a couple of tax lawyers who have been following this.’ And what do you know? One of them comes back to me at 6:15 and is like, ‘You know, they added this one extra line that’s not in either of the bills. It talks about depreciable assets. This is the loophole.’ He said something along the lines of, ‘It’s narrow enough that it shows intent for a specific kind of investment vehicle.’”

Senator “John Cornyn on his Twitter feed is promoting a lobbyist’s talking points to defend this bill.”

The original House tax cut on pass-throughs, Sirota explained, was broad enough to argue that it was merely an ideological, across-the-board tax cut rather than something that picked specific winners and losers. But the additional line was included with one intent in mind. That line carved out a particular tax windfall for owners of rental-income generators like apartment buildings or commercial office complexes, depreciable property with few or no employees.

“That’s when we realized this is an absolutely enormous story,” Sirota said.

The real estate-specific windfall immediately raised the question of whether the LLC pass-through had been part of a deal aimed at influencing Corker to switch. When asked to comment on the pass-through for a followup story, Corker didn’t seem to be familiar with it, Sirota said.

“He called it ‘ridiculous,’” Sirota said. “But then he called back — he must have talked to somebody — and he said, ‘You know, I’m not sure I want to criticize it that way. You know, I need more information. I haven’t really read it. I’ve only read a summary of the bill. I haven’t read the bill.’ Which is, of course, another story: You’re the key vote on a $1.5 trillion [deficit] bill, and you’re announcing your support for it, admitting that you didn’t even read it. So your defense is, ‘I didn’t know about the provision because I didn’t read the bill that I’m voting for.’ That became another sort of huge story about how [Republicans] are rushing the bill through without even the pivotal vote having read it.”

What followed Sirota’s story was a firestorm of public outrage on social media. Under mounting pressure, Corker wrote a letter to Utah Republican Orin Hatch, the head of the Senate’s tax-writing committee, supporting the narrative that he didn’t know anything about the pass-through by asking for clarification of the provision, where it came from and how it got in the bill. To take the heat off Corker, Hatch replied on Monday, insisting that he had authored the loophole. Hatch added that Corker and his staff never contacted the tax-writing committee about the bill, in effect publicly admitting that a key swing vote on the tax bill wasn’t even communicating with the staff or the members of the panel writing it.

However, the Hatch alibi could not withstand new reporting that revealed Corker’s chief of staff, Todd Womack, had been investing heavily in a real estate LLC in the run-up to the bill and also stood to profit from the provision. Worse, Texas Republican Senator John Cornyn, in a Sunday appearance on ABC’s This Week, admitted that the decision to include the pass-through came from an effort to “cobble together the votes we need to get this bill passed.” With Cornyn suddenly under attack himself, his office aggressively tried to backpedal.

“They were upset that anybody viewed it that way,” Sirota noted, “but you can read the transcript. It was very clear that’s exactly what he said. It’s incredible: Cornyn is now defending the provision on his Twitter feed — I swear to god, you cannot make this up — by sending out an article written by a bank lobbyist who is lobbying on this provision. So John Cornyn on his Twitter feed is promoting a lobbyist’s talking points to defend this bill.”

But Sirota noted that the neither self-enrichment nor massive, deficit-hiking tax giveaways to corporations and the richest Americans are new. Republicans have been redistributing the country’s wealth upwards since the days of Ronald Reagan. What actually is precedent-setting about this tax bill, he said, is how explicit it is.

“There’s no pretense in this bill,” Sirota said. “There was a thing the Republicans put out in their summary when the bill came out. I tweeted out the graphic. It was sort of in a section about trying to prevent people from using their LLCs to put their wage income into their LLCs. They called it ‘safeguards’ — and I’m paraphrasing here — ‘We have put safeguards in to make sure that the business income taxes not go to wage earners.’ They are very crystal-clear that this is a tax bill not for workers. This is a tax bill for corporations and business owners. That is the ideology. They’re actually open about that. They want the public to know.”


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