Billionaire business owners saved millions due to obscure 2017 tax change, ProPublica finds
An obscure change lumped into the tax code overhaul four years ago has helped several billionaire business owners save millions on their bills to the government, a report from ProPublica shows.
Under the 2017 Tax Cuts and Jobs Act developed by the administration and allies of former President Donald Trump, owners of companies built as pass-throughs, who include a Wisconsin family in the packaging business, the head of one of the country’s biggest roofing supplies distributors, and former New York City Mayor Mike Bloomberg, were able to deduct up to 20% of their companies’ profits and save millions in the process, ProPublica reported Aug. 11 in its latest report on the troves of confidential tax records it received.
Dick and Liz Uihlein, who run and own the shipping giant Uline, and Diane Hendricks, the cofounder and chairman of ABC Supply Co., reportedly gained $43.5 million and $35.9 million, respectively, in tax savings in 2018 as a result. For Bloomberg, the change reportedly helped slash his tax bill by more than $67 million.
The 2017 change for pass-throughs, which are viewed differently by the Internal Revenue Service than a C corporation like a publicly traded company, had been heralded as a win for small businesses across the country. But thanks to extensive lobbying by Sen. Ron Johnson, a Republican from Wisconsin whose constituents and donors include the Uihleins and Hendricks, the top 1% of Americans by income saved $24.8 billion in 2018, the report said, citing a April study released by the National Bureau of Economic Research.
In total, ProPublica reported that 82 households were able to walk away with a total of more than $1 billion saved on their taxes because of the changes. Among the others who reportedly benefited were CEO of engineering company Bechtel, Brendan Bechtel; former Los Angeles Clippers owner Donald Sterling; and real estate investor Steven Roth.
The pass-through changes made in 2017 were not permanent and will expire in 2025. But Sen. Ron Wyden, a Democrat from Oregon who chairs the Senate Finance Committee, wants to end those benefits sooner, having recently introduced legislation to end the deduction for those earning more than $500,000 a year, ProPublica reported.
Subscribe to Fortune Daily to get essential business stories straight to your inbox each morning.