Lower Taxes for Top 1 Percent

One of the bill’s biggest windfalls for the wealthy — cutting taxes on income received through so-called pass-through entities like partnerships, popular with real estate developers — got even more generous. The richest taxpayers will be taxed at a rate of about 29.6 percent on such income, a big cut from the current top federal income tax rate of 39.6.

The ever-lengthening list of income that will be taxed at a cut-rate could be seen as “a Donald J. Trump loophole,” said Steven M. Rosenthal of the nonpartisan Tax Policy Center. A large amount of that kind of income is on Mr. Trump’s 2005 tax return, two pages of which became public in March, and on his 2017 financial disclosure forms, which show more than 500 pass-through entities, Mr. Rosenthal said.

That expansion would cost the government $114 billion more than an earlier version of the proposal. The provision would lower rates for taxpayers simply if their businesses are organized as partnerships or other entities whose tax burdens flow to the individual. Half of that type of income goes to the top 1 percent of taxpayers, according to the Tax Policy Center. In total, that tax cut will cost the government about $476 billion over the coming decade.

Not all types of income would be eligible for the newly reduced rate. Short-term capital gains, dividends, interest and annuity payments, for example, are excluded. But the list of earnings that do qualify was expanded from earlier Republican proposals in the Senate.