"Corker Kickback" Scandal Grows As Orrin Hatch Suddenly 'Misremembers' When Provision Was Added

Late last week, the GOP tax reform legislation looked to be a done deal after Senator Corker (R-TN) - who has publicly feuded with President Trump and famously compared the West Wing to an "adult daycare center" - announced he would support the tax bill after previously voting against it.

Then, Corker's sudden change of heart took another surprising turn when it was discovered over the weekend that it came only after new language was inserted that could be worth roughly $1 million to him personally...language which has since been dubbed the "Corker Kickback".

Now, adding to a scandal that Democrats will undoubtedly attempt to leverage in their last minute efforts to block tax reform, Senator Orrin Hatch (R-UT) admits that he drafted the controversial language that helped flip Corker to a 'yes' vote, but his memory is a little more 'fuzzy' when it comes to recalling whether or not the provision was already incorporated in previous versions of the bill.  Despite Hatch's insistence that a similar provision was passed in the House version of the GOP's tax bill, tax experts interviewed by the International Business Times say that's simply not true:

In his letter explaining the situation, Hatch did not dispute that Corker and other Republicans who have large ownership stakes in real-estate-related LLCs stand to reap a personal windfall from the legislative language he added to the final bill. Instead, Hatch insisted the controversial provision wasn’t new, but was in fact included in the version of the bill passed by the House earlier this month. He wrote that the claim “that a new pass-through proposal was created out of whole cloth and inserted into the conference report is an irresponsible and partisan assertion that is belied by the facts.”

 

Hatch’s characterization of the provision was disputed by tax experts Monday, who said the Republican senator’s process argument was factually false.

 

“Chairman Hatch’s letter is an exploration of an alternative tax universe not previously known to science,” Edward Kleinbard, former chief of staff of Congress’s Joint Committee on Taxation, told IBT.

 

“[The provision’s] only connection with the House bill is that it rewards owners of capital intensive businesses, like wealthy real estate investors, but the measure of those rewards and the new provision’s design have no relationship to the House bill,” said Kleinbard, currently a law professor at the University of Southern California.

Corker

In a letter Monday morning addressed to Corker, Hatch said that the controversial provision was a compromise between the House- and Senate-passed tax bills that had generally been considered before.

Hatch further wrote that the House bill — which was never voted on by Corker in the Senate — included a section that “provided a special tax rate for pass-through income and included a ‘prove-out’ option for capital-intensive businesses,” but also acknowledged that “the Senate bill did not include a prove-out option for capital-intensive businesses like the one contained in the House bill.” He then declared: “It takes a great deal of imagination — and likely no small amount of partisanship — to argue that a provision that has been public for over a month, debated on the floor of the House of Representatives, included in a House-passed bill, and identified by JCT [Joint Committee on Taxation] as an issue requiring a compromise between conferees is somehow a covert and last-minute addition to the conference report.”

That said, tax experts familiar with the specifics of both the House and Senate versions of the tax bill said that while there are some general similarities between the House bill and the conference report, Hatch sculpted a brand new provision for the final bill —  one that was not in the previous versions of the legislation.

“The mechanism that suddenly appeared in the conference committee was entirely new,” Matt Gardner of the Institute on Taxation and Economic Policy, which opposes the bill, told IBT in an email. “While the concept of giving a special pass-through carve-out to owners of real estate is, sadly, not new, the way in which the conference committee subverts the pass-through break is entirely new.”

 

Steve Rosenthal, a former tax attorney at Ropes & Gray, agreed.

 

“The House bill allowed lower rates for qualified income from pass-through businesses, but did not have a wage guardrail,” said Rosenthal, a senior fellow at the Urban-Brookings Tax Policy Center, in an email. “The Senate bill added a wage guardrail, to limit the lower rates to income from businesses with substantial payrolls. The Senate copied the wage guardrail from another rule in the tax code today. The Conferees followed the Senate bill, but lifted the wage guardrail for real estate and, perhaps, other businesses without substantial payrolls. The rule in the Code today does not lift the guardrail for real estate and other businesses without substantial payrolls. The House bill did not have any wage guardrail to lift.”

Meanwhile, adding fuel to the fire is the fact that financial disclosures show Hatch’s wife, who owns a real estate LLC worth up to $500,000, would also directly benefit from his lucrative new policy modification.

So, what say you...just another media-fabricated 'nothing burger' or is tax reform suddenly sinking in the Washington D.C. swamp?

Comments

AlaricBalth SWRichmond Mon, 12/18/2017 - 18:05 Permalink

The FBI and the SEC are investigating Sen. Bob Corker (R-TN) for his lucrative stock trades of real estate investment giant CBL Associates Properties, a real estate company based in Chattanooga, Tennessee. Federal officials are investigating Sen. Corker’s ties to the company’s executives as well as the company’s accounting practices. Sen. Corker is close to several top employees at the firm, and he has made millions of dollars by making auspiciously timed trades of the company’s stock.Between 2008 and 2015, Sen. Corker, his wife and daughters made at least 70 trades of stock in CBL – more than triple the number of transactions he made of any other stock. Some of the trades closely preceded company announcements that led to changes in the stock’s price and seemingly resulted in the senator making millions of dollars. http://tennesseestar.com/2017/08/28/flashback-cfa-statement-on-fbi-and-…

In reply to by SWRichmond

HopefulCynical AlaricBalth Mon, 12/18/2017 - 18:18 Permalink

Frankly, IDGAF. The Democrats would ram whatever they wanted right down our throats, like they did with Obongocare. Fuck 'em. Let 'em bitch. $1 million is a drop in the bucket, relative to both the larger economy AND Corker's lifetime total haul from his corruption. The bill's nowhere close to perfect, but it gets a few things right. Pass it, let the Dems figure out what spending cuts they can live with.The time for pussyball is over, folks.

In reply to by AlaricBalth

JDFX Mon, 12/18/2017 - 17:41 Permalink

Yaawn !  Trump's NAILED IT !  Lefties are gonna hate a surging economy, as it'll prove them absolute wrong on EVERYTHING !  ????

Oldwood DeaconPews Mon, 12/18/2017 - 18:02 Permalink

Does anyone here actually know and understand what pass-through income IS, or is it just another hate the rich screed. Why don't you pay income taxes on the increased value of your home....even if you haven't sold it yet? We should only be taxing that income that actually is distributed to individuals....income tax. Not gains retained within a business entity. Stop taxing business and tax PEOPLE.

In reply to by DeaconPews

Pure Evil Oldwood Mon, 12/18/2017 - 18:55 Permalink

Pass through income is income that passes through a corporation, partnership, LLC, etc.As an officer of the corporation you can set your salary and anything else can be paid out as a dividend.If you have a CPA that knows what it's doing the corp can be used for tax avoidance especially when large sums of money is involved.https://taxfoundation.org/overview-pass-through-businesses-united-state…

In reply to by Oldwood

new game Oldwood Mon, 12/18/2017 - 19:02 Permalink

but what is income for the business owner? lunch on the business account while the workers eat sandwiches in the lunchroom. never quite works out for the blue guy. white guys always benifit no mater which way it is spun. how about a flat tax for starters, that starts 10 k above poverty that taxes only income(agree). but the real issue is donations to the "elected" scum...

In reply to by Oldwood

Secret Weapon Mon, 12/18/2017 - 17:53 Permalink

Wake me up when individual citizens and corporations are treated the same under the tax code.  After all, Citizens United said that corporations are people too.  Level the playing field.  Till then, fuck off. 

Cash Is King Throat-warbler… Mon, 12/18/2017 - 19:00 Permalink

You should see the size of McCain’s! By the way, if the Econ is so great why are emergency measures (Fed rates & FASB 157) still in place, the markets daily new record on record low volm, UE still being pushed sub 5% when everyone knows that’s a joke, why is it this tax reform (which is only temperary mind you) being pushed through Congress without 1 (there’s gotta be one non-partisan) Dem willing to vote for this? This smells of greed & or desperation knowing without reform the markets gonna crash because it’ll all be about earnings in 18! Years of buybacks and hoarding cash overseas can keep the ball in the air if these companies don’t have to waste in on taxes! Yuk, who needs an infrastructure?

In reply to by Throat-warbler…

Avichi Mon, 12/18/2017 - 18:30 Permalink

SOme of these Basturds Career RINOs ( Cro"kker" , Orin "Egghead" Hatcher) need to be kicked out of their career political position, basturd these senators have been gettin gkickback and porks for thier pockets trhu line item vetos...  It is time to CLEAN THE SWAMP AMERICA WE THE PEOPLE Next mid-term election 2018, these basturd need to be VOTED OUT