NEWS

Average Trump Cabinet Member Stands to Gain Potential $313K From Tax Repeal

Frank Bass | July 27, 2017

This story was produced by MapLight in partnership with Fast Company.

Legislation being debated this week by the U.S. Senate could save top members of the Trump administration an average of six figures on their annual tax bills if it includes a full repeal of former President Barack Obama’s signature health care reform law, according to a MapLight analysis.

The analysis of financial disclosure forms found the repeal of a 3.8 percent tax on investment income -- used to fund subsidies that provide health coverage to roughly 10 million low- and middle-income Americans -- would have saved Trump and his top two dozen officials between $3.1 million and $7.8 million, leading to an average tax reduction ranging from $124,200 to $313,700.

The MapLight analysis highlights another potential conflict of interest for the Trump White House, which has lobbied furiously for a repeal of the 2010 Affordable Care Act, otherwise known as Obamacare. Trump already has been criticized for violating the emoluments clause of the U.S. Constitution, which forbids the nation’s presidents from profiting from their tenure in the White House. The president also has refused to release his tax returns -- a move that could alleviate fears that he’s using his office for financial gain.

Unlike a House measure that passed in May, the Senate is considering keeping the tax. If the Senate is able to pass legislation -- with or without the tax --  differences between the two chambers would be sorted out in a conference committee before a bill could be sent to the president for his signature. A health care bill may not be the end of the matter; both White House and House GOP plans to change the nation’s tax code also contemplate getting rid of the 3.8 percent tax.

Two of three potential health-care measures touted by the Trump administration would have clearly benefitted his Cabinet by eliminating the net investment income tax. The House measure, which won approval by a 217-213 vote, would have meant as many as 23 million Americans would lose health insurance over the next decade. It wasn’t considered by the Senate.

“We are all pushing hard -- must get it right!” Trump tweeted in early June.

The president would have saved between $81,623 and $560,950 without the 3.8 percent tax.

A second plan to repeal and replace Obamacare was dropped by the Senate earlier this month after GOP Senate leaders failed to muster enough support for their own version, which would have kept the tax while placing health insurance out of reach for an additional 22 million Americans.

After support for the Senate bill waned, Trump pushed a simple Obamacare repeal -- which would have done away with the tax -- that senators initially refused to even consider. Repealing the law without a replacement would have increased the number of uninsured Americans by 32 million over the coming decade, the Congressional Budget Office reported. Senate Majority Leader Mitch McConnell pushed for a vote on a partial repeal on Wednesday; it was rejected by a 55-45 vote.

McConnell’s wife, Transportation Secretary Elaine Chao, would save between $5,388 and $15,250 if Obamacare is completely repealed.

Small Cuts and Big Cuts

Eliminating the investment income tax would disproportionately benefit the wealthy. The Tax Policy Center, a nonpartisan, Washington-based research organization, estimated that the top 0.1 percent of American earners -- households that report more than $3.9 million in annual income -- would save an average of $207,000 after the change was implemented. Low-income households would save about $150 annually, the center said.

Although Trump’s Cabinet is the wealthiest in U.S. history, not all of its two dozen members would benefit equally from the tax cut, according to the MapLight analysis. Three members -- Vice President Mike Pence, U.N. Ambassador Nikki Haley, and Labor Secretary Alexander Acosta -- wouldn’t have made more than $7 from a repeal of the investment income tax. Central Intelligence Agency Director Michael Pompeo, a former Kansas congressman, would have seen his potential tax cut top out at $31.

Even so, more than a quarter of Trump Cabinet members stood to gain more than the average American household earns in a single year. Two members -- Education Secretary Betsy DeVos, and Commerce Secretary Wilbur Ross -- could have saved more than $1 million, based on financial disclosure reports. Treasury Secretary Steven Mnuchin, a former Goldman Sachs executive, could have saved as much as $890,400 from the tax repeal.

DeVos, who married into a family that created the multi-level marketing scheme known as the Amway Corp., stood to gain the most, with a potential tax cut that would have ranged from $1.95 million to $4.15 million, according to the analysis.

Billion-Dollar Cabinet

Trump, a real estate developer who has parlayed his fame into a reputed multibillion-dollar licensing and reality television show fortune, has stacked his Cabinet with wealthy individuals. More than half have a net worth that exceeds $1 million; Ross and McMahon are both billionaires. By contrast, half of all Americans have a net worth of less than $45,000.

The exact net worth and investment income isn’t known for each Cabinet-level member because the Office of Government Ethics only requires a range of income to be reported. Pence, for example, reported investment income that ranged between $0 and $200, which would have led to a potential gain of as much as $6 if the 3.8 percent tax had been repealed. DeVos reported investment income ranging between $54 million and $115 million.

Ten Cabinet-level officials reported potential investment incomes of less than $100,000; they included former government and military officials with limited experience in the private sector. Only four Cabinet-level appointees with substantial experience in the public sector cited the potential for six-figure gains from investment income: Interior Secretary Ryan Zinke, a Navy veteran and Montana congressman; Transportation Secretary Elaine Chao, a former Cabinet secretary under George W. Bush and McConnell’s wife; Agriculture Secretary Sonny Perdue, a former Georgia governor; and Health and Human Services Secretary Tom Price, a former Georgia congressman.

Price, a physician, traded hundreds of thousands of dollars’ in health-care stocks while voting on health-care issues during his 12-year congressional tenure. Price claimed the trades were legal and transparent; former U.S. Attorney Preet Bharara was investigating the trades as a potential conflict of interest that violated a 2012 congressional insider-trading law when he was fired by Trump, according to ProPublica, an online investigative news site.

Estimated Savings from Repeal of Net Investment Income Tax for Cabinet Officials

Name & Title

Minimum Savings

Maximum Savings

Secretary of Education Elisabeth P ("Betsy") DeVos

$1,950,146

$4,149,351

Secretary of Commerce Wilbur Ross

$196,301

$1,313,982

Secretary of the Treasury Steven T. Mnuchin

$459,090

$890,449

Administrator of the Small Business Administration Linda E. McMahon

$305,855

$618,553

President Donald Trump

$81,623

$560,950

Secretary of Housing and Urban Development Benjamin Carson

$9,936

$77,229

Secretary of State Rex Tillerson

$15,265

$56,873

Secretary of Health and Human Services Thomas E. Price

$18,736

$40,695

Secretary of Agriculture Sonny Perdue

$31,284

$34,467

Director of National Intelligence Daniel R. Coats

$10,053

$26,568

U.S. Trade Representative Robert E. Lighthizer

$9,192

$22,717

Secretary of Veterans Affairs David J. Shulkin

$6,943

$19,057

Secretary of Transportation Elaine L. Chao

$5,388

$15,250

Secretary of the Interior Ryan Zinke

$1,295

$4,313

Secretary of Defense James Mattis

$1,069

$3,303

Director of the Office of Management and Budget John M Mulvaney

$886

$2,609

Attorney General Jefferson B. Sessions

$845

$2,251

Administrator of the Environmental Protection Agency Scott Pruitt

$575

$1,684

Secretary of Energy James Richard Perry

$499

$1,431

Secretary of Homeland Security John F. Kelly

$100

$315

White House Chief of Staff Reince Priebus

$90

$216

Director of the Central Intelligence Agency Michael R. Pompeo

$4

$31

Secretary of Labor Alexander Acosta

$0

$7

Vice President Michael Pence

$0

$6

Representative of the United States to the United Nations Nikki Haley

$0

$4

This story was reported with assistance from Laura Curlin, data director; Myer Johnson-Potter; Alice Gold; Julia Rock; and Matt Weis.

Methodology:

MapLight analysis of financial disclosure reports for President Trump and the members of the Cabinet based on filings from the U.S. Office of Government Ethics. For the purposes of this analysis, income reported under “Other Assets and Income” is assumed to be subject to the 3.8% net investment income tax. This data includes income earned by the filer, the filer’s spouse, and any dependent children. Income is reported for the preceding calendar year to the filing date, varying for each filer, and was prorated to a period of one year. All members of the Cabinet were assumed to qualify for the tax.

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