The chairman of the Senate Finance Committee today dismissed published reports that U.S. Sen. Bob Corker had any influence in shaping the tax treatment of commercial real estate in the tax reform measure moving through Congress.
Corker, a former Chattanooga mayor and commercial real estate builder and developer, decided last week to support the GOP tax plan after previously voicing opposition to the developing plan.
According to a report by the International Business Times, Republican leaders added a last-minute provision to the bill that would reduce taxes on income from real-estate LLCs. Corker, who owns a large amount of commercial real estate, made up to $7 million last year in such income, according to the paper and Corker's annual financial disclosure filings.
U.S. Sen. Orrin Hatch, R-Utah, the author of the legislation changing the taxation of real estate limited partnerships, said in a letter released today that reports that Corker had any role in the drafting of the real estate-related tax language are "categorically false." Hatch said the proposed changes have been debated and considered for the past year and were included in the House-passed version of the tax package, although the language was not in the original Senate version.
The change would allow real estate businesses to take advantage of a new tax break that's planned for partnerships, limited liability companies and other so-called "pass-through" businesses.
"This last-minute provision will significantly benefit the ultra-wealthy real estate investor, including the president and lawmakers on both sides of the aisle, resulting in a timely tax-reduction gift for the holidays," Harvey Bezozi, a certified public accountant and the founder of YourFinancialWizard.com, told Bloomberg news today. "Ordinary people who invest in rental real estate will also benefit."
James Repetti, a tax law professor at Boston College Law School, called the measure "a windfall for real estate developers."
Although Corker could benefit from the change, the Tennessee Republican has been a skeptic of the merits of such changes in the past, Hatch said.
"To the contrary (of reports indicating Corker may favor the cut in real estate partnership taxes), virtually all the concerns you had raised in the past about the treatment of pass-through businesses in tax reform were to voice skepticism about the generosity of various proposals under consideration," Hatch said in a letter to Corker today. "It takes a great deal of imagination – and likely no small amount of partisanship – to argue that a provision that has been public for over a month, debated on the floor of the House of Representatives, included in a House-passed bill, and identified by JCT as an issue requiring a compromise between conferees is somehow a covert and last-minute addition to the conference report."
The House is expected to vote on the sweeping tax reform and tax cut measure on Tuesday with a Senate vote expected later this week.
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