During a Q&A session hosted by New York Times Deputy Washington Editor Jonathan Weisman on Thursday, House Speaker Paul Ryan appeared to be caught off guard when asked about the conflict of interest between the Trump Organization and Republicans’ goal to lower the corporate tax rate.
“There’s a saying: ‘Not a cent for the 1 percent,’” Weisman said. “We do know that the affluent have done pretty well over the last 20 years as the middle class has struggled. So can you write a simplified tax code and keep it progressive?”
After detailing his thoughts on the need to lower rates to help “middle-income taxpayers” and smaller businesses, Ryan responded.
“The issue that I think gets confused in this whole ‘1 percent’ conversation is, 80 percent of all of our businesses in America pay their taxes as individual people,” he said. “We call them pass-throughs, LLCs, sole-proprietors, subchapter S corporations—”
“—The Trump ‘corporation,’” Weisman interjected. At that point, Ryan seemed to stumble.
“I think that’s a c-corp actually,” he said. After Weisman insisted that it wasn’t, Ryan laughed and added, “I actually don’t know the answer to that. I didn’t really look into that one.”
The Trump Organization is, indeed, registered as an LLC. According to the Washington Post, many of the companies under its umbrella qualify as “pass-throughs”, or businesses that are taxed under the individual tax system, and would thereby benefit from lower rates. (The Trump Organization did not immediately respond to questions about its tax status or whether it had elected to be taxed as a c-corp, as Ryan suggested.)
The fact that Ryan, one of the most powerful Republicans in Washington who has taken it upon himself to lobby for a tax overhaul, was unaware that the Trump Organization is an LLC was overshadowed by the fact that he didn’t seem to care. For the better part of an hour on Thursday morning, the House Speaker railed against the U.S. corporate tax rate, the need to boost competitiveness on a global scale, and how assisting business would serve low-income taxpayers.
“Lower corporate tax rates, and workers get better wages,” he argued.
But when confronted with the fact that Republican proposals would potentially give the president’s businesses a cut, Ryan deflected.
“You’ve got to understand: there are businesses that are pass-throughs that have 500 employees, 100 employees, 200 employees. Those are job-creators,” he said. “But they’re competing against other countries. Getting those rates down so they’re competitive with the rest of the world is really crucial.”
Although Ryan couldn’t confirm how President Trump’s various businesses would be affected by a lower corporate rate, the fact that they would benefit is largely indisputable, even if Republicans are unable to reach Trump’s target of a 15 percent corporate rate. (“Our goal is to get to the mid to low 20s. We think that’s achievable,” Ryan said on Thursday.)
According to the Washington Post, Trump’s 2005 tax return “suggests that a…cut similar to the one Trump is proposing could have lowered his tax obligation by potentially tens of millions of dollars in a single year.” Overall, cutting the rates to even 20 or 25 percent would have a net positive effect for most of his businesses.
“Trump is the king of pass-throughs,” Steven M. Rosenthal, a senior fellow at the nonpartisan Tax Policy Center, told the Post. “He has pass-through businesses everywhere. This is a very large issue.”
Ryan isn’t the first to punt on the issue of lower corporate tax rates and how they might benefit the president. Back in April, after rolling out Trump’s initial tax proposal, Treasury Secretary Steve Mnuchin was asked about the effect that a 15 percent rate would have on the president’s businesses themselves.
“I can’t comment on the president’s tax situation since I don’t have access to that, okay,” he said.
According to research from the Tax Policy Center, a 15 percent flat corporate tax rate would likely result in some $9 billion in lost tax revenue over 10 years.
The speaker’s office did not immediately return a request for comment.