(Bloomberg)—President Donald Trump was once one of the top funders of an effort by wealthy New York real estate executives to preserve a tax break that he now wants to end, a memo obtained by Bloomberg shows.
Trump Organization, the corporate umbrella for Trump’s business interests, gave $60,000 to the Coalition Against Double Taxation in 1985 in a bid to protect the federal deduction for state and local taxes, according to the memo, dated May 14, 1986. Thanks to intense lobbying, the deduction survived a major overhaul of the U.S. tax code later that year.
For Trump, what was then a rewarding tax break is now a potential windfall to help offset deep tax cuts: The White House and congressional leaders released a plan last week to overhaul the tax code that would include slashing rates on businesses and individuals. Ending the state and local tax break, known as SALT, would raise an estimated $1.3 trillion over a decade.
Natalie Strom, a White House spokeswoman, said that “there are very few people who understand the tax system, the loopholes and exemptions currently buried in our overtly complicated tax code better than” Trump. Strom made clear that she was not confirming the contents of the 1986 memo. She also said that 80 percent of the benefit from the SALT deduction goes to the top 20 percent of households.
Even so, one of Trump’s top economic advisers, Gary Cohn, has said the proposal to end the SALT deduction is up for negotiation.
In 1985, Trump pledged at least part of his contribution to the pro-SALT coalition at a breakfast fundraiser at the Regency Hotel, just six blocks from Trump Tower, according to a person who attended the meeting. About 20 people attended the event -- most of whom were real estate tycoons, whose property bills could have skyrocketed if the deduction were eliminated.
Trump Organization gave $60,000 in 1985 but hadn’t responded to a fresh round of solicitations the next year, according to the 1986 memo. The person who attended the breakfast meeting confirmed the memo’s authenticity. The document lists “Don Trump” beneath Trump Organization’s contribution.
The pro-SALT coalition, which ultimately included municipal governments and unions, grew from an effort by New York businessmen -- David Rockefeller, Laurence Tisch and Lewis Rudin -- to preserve the tax break, according to a 1988 book about the last major tax overhaul: “Showdown at Gucci Gulch: Lawmakers, Lobbyists, and the Unlikely Triumph of Tax Reform.”
Now, a successor group, Americans Against Double Taxation, is fighting to keep the deduction. Its members include the National Association of Realtors, one of Washington’s highest-spending lobbying groups.
Filers in predominantly Democratic, high-tax states -- including New York and California -- would suffer the most from repealing the SALT deduction. But some Republican members of Congress whose constituents also benefit from the break have vowed to defend it.
Trump’s potential split with the New York real estate world over SALT isn’t his only apparent change of heart: In pitching a tax overhaul to voters, he routinely cites the 1986 legislation as an inspiration. Yet in 1991 congressional testimony that was unearthed by the New York Times, he called that bill “an absolute catastrophe” for both the country and the real estate sector.
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