It is no surprise that many of President Donald Trump’s closest friends in the world of New York real estate are in love with the tax bill that Congress are trying to pass before the Christmas break—it could make them all even richer than they are already.
The bill promises to lower corporate tax by 14 percent, as well as slashing personal taxes for real estate moguls. The tax breaks will add more than $1 trillion to U.S. national debt, according to government and independent analysis, and will be paid for (in part) with $400 billion in cuts to Medicare and other entitlement programs over the next decade.
But New York real estate mogul Steve Witkoff—who counts President Trump as a personal friend—says the bill will grow businesses like his, and that money will trickle down and turn the U.S. economy into a powerhouse, increasing average American’s wages and paying down the debt.
“I think you've got to create all those conditions that get the private sector to want to invest,” Witkoff tells Newsweek. “The president's game plan is more growth. Let's add several trillion more dollars of GDP, expand the tax net, lower the amount that you pay, but expand it.
“More tax revenue means we're going to pay down the deficit.”
Witkoff became friends with Trump in the 1990s when he was building up his billion dollar real estate empire and Trump was buying up properties in Manhattan. Two decades on, Witkoff owns 51 properties—including large buildings in London, Miami, and New York—and has a home in Miami Beach where he lives four months of the year.
He believes his buildings are part of the solution to get the American economy growing at the 4 percent rate Trump has promised. In August, Wikoff activated a new nine-story, 18,000-square-foot billboard in Times Square that can reportedly make as much as $35,000 per minute. It is attached to a luxury hotel due to be completed in 2017.
Witkoff says the bill will be a shot in the arm for contractors: “I think that the more incentives you create for construction to occur—those are amazing jobs, construction jobs are high paying jobs—I think you've got to create all those conditions that get the private sector to want to invest.”
But not everyone agrees. New York City’s Chief Financial Officer, Comptroller Scott M. Stringer—who safeguards the financial health of the city’s residents—issued a report that said Trump’s tax plan would harm all but the wealthiest New Yorkers.
“The notion that this tax plan will pay for itself is a fiction. This is faith-based economics—and it’s not rooted in facts or data,” Stringer, told Newsweek.
“If Congressional Republicans were serious about tackling the debt, they wouldn’t blow a trillion dollar hole into the budget with a massive tax cut for the wealthy that we cannot afford,” Stringer continued.
History, he says, makes clear this plan would never pay for itself and won’t help average Americans. As an example, following President Ronald Reagan’s trickle down economic policies in the 1980s, manufacturing workers wages have remained stagnant for more than 30 years. The tax bill has a giant hole in it and is built on bogus assumptions, Stringer says, calling it a “back-door” to slashing social safety net programs that help working Americans just to make up for the tax shortfalls it creates.
Stringer’s report found that under Trump’s tax bill “the highest income earners in New York (the top 1 percent) would see average tax cuts of over $100,000—far in excess of the average 1 percent cut for families with incomes under $100,000.”
Witkoff is proud to identify himself as a member of the one percent—the wealthiest Americans—who he says share his support for Trump’s tax bill. He is also good friends with billionaire real estate tycoon Howard Lorber, one of Trump’s closest friends, who he says shares a similar view of Trump’s tax bill. A spokesperson for Lorber declined to comment when contacted by Newsweek.
Witkoff and Lorber were among a cadre of New York real estate developers who attended a lunch with Trump at Trump Tower on June 8, 2016 during the 2016 election. After the lunch—which came just a day before Donald Trump Jr.’s infamous meeting there with a Russian lawyer now being probed by Robert Mueller—many of the attendees donated heavily to Trump’s campaign.
At the time it looked certain Trump would become the Republican Party's nominee for the presidential race and he began raising money from his friends to build his campaign. Before the meeting, Trump told Bloomberg he was gathering together “the biggest real estate people in the country.”
Also invited was Trump’s longtime friend, billionaire Richard LeFrak, and the current and former chief executives of Vornado Realty Trust, Steve Roth and Michael Fascitelli. In all there were more than 20 people who represented New York’s movers and shakers. The lunch lasted about two hours.
Witkoff said the general topic of conversation at the meeting was how to get the economy going again, but said: “I don’t remember the details." He recalled that the threat of terrorism was also discussed but that “the larger discussion point just as much was the economy, and that’s what people were talking about.”
Five days after the gathering, on June 13 Witkoff donated $200,000 to the Trump Victory PAC, a joint fundraising committee between Trump’s campaign, the Republican National Committee (RNC), and 11 state Republican committees, according to Witkoff and Federal Election Commission (FEC) donation filings.
Trump’s campaign immediately got $94,600 and the rest was handed out the various state Republican parties between September and October during the election.
In the past, Witkoff had given large sums to Hillary Clinton, New York Senator Chuck Schumer, and the Democrats, as well as Republicans Mitt Romney, John McCain, and Rudy Giuliani. But in 2016 he gave solely to Trump and Republicans. When asked why he made the donations to Trump, Witkoff said “I contributed because he is my friend.”
Lorber made a nearly identical donation the same day as Witkoff, FEC filings show. Real estate mogul Fascitelli donated $50,000 a day later on June 14. Fascitelli’s colleague Roth donated $235,102 on July 7.
LeFrak, who Trump has said will help spearhead his infrastructure program, donated nearly $200,000 two days after the lunch on June 10 that went to the RNC and state Republican parties.
Sources that spoke with The Washington Post December 7 said that LeFrak is worried parts of the tax plan will have a negative impact on wealthy New Yorkers and had pressed Trump at a fundraiser at the end of November for changes that would allow them to continue deducting their state and local taxes from their income. Trump was vague on his answer, one anonymous attendee said.
This week White House press secretary Sarah Sanders explained that wealthy donors, including the president himself, use campaign contributions to buy access to powerful lawmakers with the hope they will give attention to their pet issues.
“That's the reason that often special interests control our government more than the people do. And that's one of the reasons that this president ran to be president.” she said.
Witkoff says he wouldn’t try to influence Trump on the tax bill. “I can tell you that never once did I, or would I, make a telephone call with regard to my own self interest,” he said. “Any tax legislation, in my view, that gets passed is good for the country—I mean any tax legislation that somewhat reflects the current Congressional plan.”
Yet the plan as it stands gives preferential treatment to wealthy Americans like Witkoff says Comptroller Stringer with its 20 percent reductions on levies for “pass-through” income that benefit people with large real estate portfolios, and by repealing the inheritance tax on large fortunes.
The latest version of the plan will see the tax rate for America’s highest income earners fall from 39.6 to 37 percent. “We don't need the money,” wrote Michael Bloomberg, a billionaire and former New York mayor, of the bill on Friday, calling it “pure fantasy to think that the tax bill will lead to significantly higher wages and growth, as Republicans have promised.”
Stringer couldn’t agree more. “At a time of massive inequality, this bill fortifies it by pickpocketing everyday Americans,” he says. “It’s no surprise this bill treats real estate investments much better than it treats some other forms of income.”
“Meanwhile, our knowledge economy and many professional services—which are a very big and important sector of the New York City economy—would be punished in this tax bill,” he added. “It’s a plan that includes a carve out for the real estate industry allowing them to deduct interest while other industries won’t benefit from this provision. Simply put, it’s a terrible plan for New York, but it’s great for Donald Trump’s businesses.”
Senate and House Republicans announced Friday that they’ve been able to reach an agreement that consolidates the two versions of the tax bills they passed in late November. They are set to vote on the final bill next week.
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