The Curry/Trump Split in Tax Reform

Abstract

This is a follow-up to my SSRN post on December 6, 2017 of my Tax Notes article: Tax Reform: Taxing Trump and Curry Under the Republican Plan, Tax Notes, Vol 157, November 2017. The article discusses the House Republican version of the Tax Cut and Jobs Act (TCAJA), which adopted a maximum 25% rate on certain business income of pass-through entities. In an effort to sell the provision, the House Republicans compared the tax treatment of Stephen Curry, a star professional basketball player, who would not qualify for the 25% rate, to Steve of “Steve’s Bike Shop,” who would be entitled to the 25% rate. Apparently, the House Republicans used Curry because he got into a fight with President Trump over Curry’s decision not to visit the White House in connection with a celebration of his team’s NBA championship. The article argued that (1) the comparison of Curry to Steve is bogus, and (2) the real comparison is of Curry to President Trump. The article (1) showed that under the 25% provision President Trump would receive a “huge” tax break compared to Curry, and (2) argued that this 25% rate is bad tax policy and should be stricken from the TCAJA, thus taxing both Curry and President Trump at the same maximum rate. The title to the attached Letter to the Editor of Tax Notes is The Curry/Trump Split in Tax Reform, Tax Notes, page 151, Jan.1, 2018, and it compares the treatment of President Trump and Curry under Section 11011 of the Final TCAJA. This provision adds Section 199A to the Code, which provides, as a substitute for the 25% maximum tax in the House bill, a deduction of 20% of certain pass-through income. The Letter (1) demonstrates how the Final TCAJA continues to provide President Trump a “huge” tax break compared to Curry, and (2) asserts that a future Congress will repeal it because the disparate treatment is patently unsound from a tax policy perspective.