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Trump Exploiting CARES Act Tax Loopholes
WASHINGTON, D.C. – This Tax Day, government watchdog Accountable.US is spotlighting four little-noticed special interest provisions that were quietly slipped into the CARES Act and have something in common: they’re all readily available to be taken advantage of by President Donald Trump. Together, these provisions could add up to tens of millions of dollars in taxpayer bailout money and tax breaks for Trump.
The recent Supreme Court ruling allows the president to continue withholding his tax returns from the public, which, if released, would shed light on how much, if any, he is paying in taxes or what government benefits his businesses enjoy. While the stimulus law prohibits the Trump Organization from participating directly in the U.S. Treasury bailout program, these special interest giveaways are still very much on the table for the president this tax season:
- A Tax Provision That Would Reduce Tax Liabilities For Real Estate Businesses That Are Set Up As Pass-Through Entities—The Exact Corporate Structure That Trump Has Created For His Real Estate Empire
- A Provision That Would Allow Firms To Write Off 100% Of Their Losses Rather Than 80%, Which Will Almost Certainly Lower Trump’s Tax Liability
- A Tax Change That Allows Hotels – like Trump International – To Immediately Deduct Renovation Expenses, Rather Than Having To Take The Deduction Over 37 Years
- Four Trump Hotels Could Be Eligible For Up To $10 Million Each In Forgivable SBA Loans Thanks To An Opaque Provision That Specifically Made Hotel And Restaurant Chains Eligible To Receive Funding For Each Property Under 500 Employees
“The President has demonstrated before he has no scruples enriching himself off taxpayer money, so why would he hesitate exploiting the special tax loopholes his allies in Congress seemingly carved out just for him?” said Kyle Herrig, president of Accountable.US. “The public deserves to know if the president is enjoying tens of millions of dollars in taxpayer giveaways from the CARES Act while he resists fully extending the law’s aid to millions of newly unemployed workers.”
Special Interest Provision Buried In The CARES Act
Buried in the CARES Act was a special interest provision that would reduce the tax liability for people who have businesses set up as pass-through entities. The provision would suspend a limitation on how much in business losses a person could deduct against their non-business income. This tax change will disproportionately benefit one exclusive class of people: very wealthy individuals with large real estate holdings they have set up as pass-throughs. And no one fits as neatly into that category as President Trump, an extremely wealthy man with a vast real estate empire with a corporate structure set up as hundreds of pass-through entities.
Another special interest provision buried in the Cares Act works in tandem with the pass-through provision. It allows these firms to deduct 100% of their losses rather than the 80% of their losses that was previously allowed. President Trump’s businesses are reportedly losing millions, and this change will allow him to further lower his overall tax liability.
Another little-noticed tax change in the Cares Act allows companies in the hotel and restaurant industry to immediately deduct expenses for renovations, rather than having to amortize them over 37 years. This provision would allow President Trump to immediately lower his taxable income by millions of dollars, and because it is retroactive to 2018, he would even receive a tax refund.
The biggest special interest provision of all that could benefit President Trump was so opaque that it was described by the New York Times as “impossible for a casual reader of the legislation to identify.” This provision allowed restaurant and hotel chains to be eligible for SBA forgivable loans of up to $10 million for each location, even if the overall chain has more than 500 employees. According to ProPublica, four Trump properties may qualify for this program—a potential $40 million windfall of taxpayer funds. And unlike the Treasury bailout program which he was barred from, the vast majority of these funds would not need to be repaid.
While President Trump is likely to benefit immensely from the Cares Act, we may never know the full extent of his windfall from the legislation. The Washington Post reported that SBA is not statutorily compelled to disclose the recipients of the SBA bailout program, and since President Trump’s hotels are privately owned, he would not have to file any paperwork with the SEC disclosing the loans. And since President Trump has never publicly disclosed his tax returns—and his now-former Chief of Staff said he never would—we may never know the extent which he took advantage of the tax breaks inserted into the legislation.
Accountable.US is a nonpartisan watchdog group that exposes corruption across all levels of government.