Special Trump tax provision gives $17 billion break to millionaires, gov’t report finds:

Special Trump tax provision gives $17 billion break to millionaires, gov’t report finds:

The beneficiaries are those who claim the new “pass through” deduction of up to 20 percent in the Trump/GOP tax plan.

WASHINGTON — The wealthiest Americans will benefit the most from President Donald Trump’s tax deduction for owners of “pass-through” businesses, according to a congressional report released Monday.

The deduction, which ranges up to 20 percent, will shower $40.2 billion in tax breaks on owners of pass-throughs — largely businesses owned by an individual or a partnership, or those “S” corporations that kick income and losses to shareholders for tax purposes — in 2018, the Joint Committee on Taxation estimated. The provision was included in the larger overhaul of tax rates enacted in December.

In 2018, the lion’s share of the benefit — $17.4 billion, or 44.3 percent of the total — will go to roughly 200,000 Americans making $1 million or more who claim the pass-through deduction, the committee said. Another $3.6 billion, or 8.9 percent, will go to a similar number of taxpayers who earn $500,000 to $1 million.

By 2024, the tax deductions will amount to $60.3 billion, and those making $1 million or more will account for $31.6 billion (52.4 percent) of that.

The numbers don’t come as a shock to those who closely follow tax debates in Washington.

“The distribution of benefits from the pass-through deduction largely reflects the distribution of income from these businesses,” said Mark Mazur, director of the nonpartisan Tax Policy Center. “Pass-through income from partnerships, S-Corps and LLCs is highly concentrated toward the top of the income distribution.”

Trump and congressional Republicans created the new deduction to try to achieve relative parity between pass-through and “C” corporations, which benefit in a reduction of the corporate tax rate from 35 percent to 21 percent.

While the dollar-value of deductions skews toward the top, it’s not only the very wealthiest pass-through owners who will be able to pay less in taxes.

About 9.2 million taxpayers who make $100,000 to $500,000 this year will account for $15.7 billion in deductions, and roughly 9.7 million filers in that income range will get $19.6 billion in 2024, the Joint Committee on Taxation reports. Their counterparts who earn less than $100,000 are in line to share about $3 billion in 2018 and a little less than $4 billion in 2024.

by Jonathan Allen / 

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