TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Thursday, May 17, 2018

Top GOP Donors Close Wallets Over Tax Law

CNN, Top GOP Donors Close Wallets Over Tax Law:

As national Republicans scramble their resources for a high-stakes midterm election year, some of the party's biggest and most reliable donors have quietly withheld their support for Senate and House Republican groups out of frustration with the new tax law, CNN has learned.

The standoff has a tinge of irony because the tax changes are a centerpiece of the GOP's case to voters in the midterm elections. Meanwhile, Democrats have accused Republicans of catering to the wealthiest Americans with the law: In a news conference earlier this year, House Minority Leader Nancy Pelosi warned that the Republican tax plan is "padding the pockets of GOP donors, executives, and big corporations at the expense of everyone else."

But some of the Republican Party's powerhouse donors in fact feel deeply stung by the law and have made their displeasure known to party leaders by keeping their wallets shut, according to multiple sources familiar with the situation, who spoke with CNN on condition of anonymity. Although some of the donors have not sworn off contributions to individual campaigns or even the Republican National Committee, all have so far withheld contributions to the House and Senate Republican campaign arms -- which are key players in the 2018 midterm elections -- as a way to send a message over the law.

The donors who have boycotted, all of whom are leaders of prominent hedge funds, include Paul Singer, of Elliott Management; Citadel's Ken Griffin; Warren Stephens of Stephens Inc.; Cliff Asness of AQR; Bruce Kovner, formerly of Caxton; and Third Point's Daniel Loeb. Combined, their donations accounted for more than $50 million to Republican groups during the 2016 election cycle; Singer ranked among the top 10 donors of either party, while Griffin and Stephens ranked in the top 20.

Collectively, they have bristled at what they view as favored treatment for corporations under the law. While the corporate tax rate was slashed from 35% to 21%, hedge funds are largely taxed at the top individual rate, which ticked down from 39.6% to 37%.

Now, these donors are venting their frustration at congressional Republicans who drafted the legislation. The rift has come at a heavy price: Since the new tax rules were approved late last year, these donors' usually generous support for House and Senate Republican groups has noticeably dried up.

https://taxprof.typepad.com/taxprof_blog/2018/05/top-gop-donors-close-wallets-over-tax-law.html

Tax, Tax Policy in the Trump Administration | Permalink

Comments

". . . hedge funds are largely taxed at the top individual rate"

Really? Since when?
Hedge funds and/or private equity managers remain the beneficiaries of the "carried interest" exception to the taxation of manager fees at ordinary income rates. The new tax law made virtually no dent in this absurd situation.

They may be disappointed in the legislation but I hardly think this is the reason.

Posted by: John | May 18, 2018 1:35:04 AM

Most surveys show the GOP raising more than the Democrats.

Posted by: Mike Livingston | May 19, 2018 3:25:08 AM