House Tax Bill Is Littered With Loopholes for Wall Street’s Wealthiest

By Zachary Mider

November 21, 2017, 4:00 AM EST Updated on November 21, 2017, 11:38 AM EST

-- ‘Glitches’ in measure might benefit investors, fund managers
-- Senate is working on its own provisions; changes are likely

Lawmakers who sped a bill through the U.S. House last week may have handed a few more goodies to Wall Street’s wealthiest than they realize. ... Investors in billion-dollar hedge funds might be able to take advantage of a new, lower tax rate touted as a break for small businesses. Private equity fund managers might be able to sidestep a new tax on their earnings. And a combination of proposed changes might allow the children and grandchildren of the very wealthy to avoid income taxes in perpetuity.

These are some of the quirks that tax experts have spotted in the bill passed by the House on Nov. 16, just two weeks after it was introduced. Whether they were intentional or accidental, it will be up to congressional tax writers to keep or revise them before a final bill makes it to President Donald Trump’s desk -- assuming both chambers can work out a compromise. Senate leaders plan to vote on their own version of tax legislation by the end of this month.

“There sure are a lot of glitches and loopholes, in large measure because there’s so much complexity in this bill that’s being raced through,” said Steven Rosenthal, a senior fellow with the Urban-Brookings Tax Policy Center, a Washington policy group.

Loopholes aside, the biggest features of the Republican tax plans in both chambers bear a mix of news for wealthy investors.