Since the final version of the congressional Republicans’ tax bill was released last Friday, Sen. Bob Corker (R-TN) has been the focus of conversations. This is because the fiscal hawk would personally benefit from a last minute provision to the bill, and having recently backtracked on his decision to vote ‘no’, the timing is curious.
The new provision would lower taxes on income from real-estate LLCs and, according to the International Business Times, Sen. Corker made up to $7 million in 2016 from commercial real estate income.
Corker, who is not a member of the tax-writing committee, said he did not ask for the provision to be added and had no knowledge of it. He even went so far as to say he had not even read the bill yet, despite announcing his intention to vote ‘yes’ on the major piece of legislation.
So what happened? Originally, the bill had specific provisions on “pass-through income,” which is income from a business on which the business owners pay taxes individually (and the business pays no taxes at all). This kind of arrangement is typically used by small businesses, such as law firms and medical doctors. However, since congress decided to reduce corporate tax rates, they reasoned pass-through businesses should also get a reduction. The basic idea is that 20% of income earned by owners of pass-through entities will be tax free. Ultimately, what resulted was clearly put in place with lobbyists and donors in mind.
Since the benefit was meant for investors who do things like buy buildings and rent them out, limitations were included to prevent people who work for a living from taking advantage of this provision. Then, another provision was added so that businesses with many employees could take advantage of the benefit. Finally, the current version has a new provision (which was not in either the house or senate bills) giving a special benefit to owners of large commercial rental properties (like, for example, Corker Properties X LP, which owns an office building in Chattanooga, Tennessee).
While the senator claims he did not read the latest version of the $1.5 trillion tax reform bill, his changed position seems everything but coincidental, given his reputation as a fiscal hawk. Because of this, Corker has made a show of asking Sen. Orrin Hatch, the Chairman of the Senate Finance Committee, the origin of the provision. Yet, Corker has made no indication that he will change his vote back to align with his principles.
With Sen. McCain’s return to Arizona to rest following cancer treatment, Senators Corker and Rubio’s votes matter even more, and their inconsistency is striking. While Sen. Marco Rubio (R-FL) can justify his switch to a ‘yes’ on the tax bill because the child tax credit’s refundability was increased from $1,100 to $1,400, no such change can be pointed to to explain Corker’s vote.
In a statement posted to twitter, Corker said the bill is “far from perfect” but that the country is “better off with” this piece of legislation. It seems the senator is weighing his own financial well-being more heavily than that of his own constituents.