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GOP Tax Bill Rewards Real Estate, Oil While Hurting Hospitals

Real estate received a bit of a mixed bag in terms of benefits ... will open the Arctic National Wildlife Refuge to drilling in a move Sen. Lisa Murkowski, R-Alaska, says will bring the government $1 billion in revenue over 10 years. Manufacturers and ...

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GOP Tax Bill Rewards Real Estate, Oil While Hurting Hospitals //id:"+t+"; typeof obj: "+typeof i))}function p(){var r,u,n,t;if(e.length&&!i){do for(r=e,u=r.length,e=[],i=1,t=0;t1);i=0}else i&&(i=2)}function it(i,r){for(var s,v,h,u=[],c=r?r.length:0,e=0;e .storyimage.smallfullwidth .image,.storyimage.smallfullwidth img{background:#000;margin:0 auto}#toast-container{display:none}.mobile .galleryinfo .img-divider{display:none} #main .one-col, #main .two-col, #main .three-col{margin-right:-.016rem;margin-left:-.016rem}.homepage.midlevel .pagingsection>,.channelplayerpage.midlevel .pagingsection>{display:none} Home News Weather Entertainment Sports Money More > Lifestyle Health & Fitness Food & Drink Travel Autos Video news You are using an older browser versionPlease use a supported version for the best MSN experience. GOP Tax Bill Rewards Real Estate, Oil While Hurting Hospitals U.SNews & World Report 1 day ago Andrew Soergel © David McNew/Getty Images Oil and gas companies are expected to benefit from the GOP's new tax legislation. President Donald Trump managed to lock down his most significant legislative victory of the year with just days remaining in 2017, as GOP lawmakers signed off on a tax overhaul set to kick in on January 1.But the legislation – which will reshuffle Americans' personal tax rates, strip away several popular deductions and sharply reduce burdens on businesses – appears to favor some industries over others, and there isn't much in the legislation itself that guarantees long-term job creation and wage gains going forward."There's probably going to be some unintended consequences from all of this tinkering around of the tax codeAnd I think it will probably harm some companies – some sectors," Jeffrey Gundlach, founder of DoubleLine Capital investment outfit, told CNBC in a December interview.Health insurers and providers, for one, aren't likely to be better off in the near term, as the tax bill strips away Obamacare's individual mandate provisions that required most Americans to purchase health insurance or face a penaltyWith fewer Americans buying health plans after the repeal language kicks in during 2019 – and doctors' offices and hospitals likely facing a new wave of uninsured patients that will eat into their profitability – premiums are expected to rise, and insurers are expected to continue pulling out of certain markets altogether.Charities and nonprofits also don't receive particularly favorable treatment under the new legislationWith a doubled standard deduction, it's expected that fewer families in the middle class will itemize their deductionsThat means there are fewer tax incentives for lower- and middle-income Americans to donate to charity."If you had asked me five years ago if I would ever claim the standard deduction, I would have laughed at youBut it looks like next year I'll be taking the standard deduction," says Don Susswein, a principal at RSM U.S.'s Washington National Tax team"I looked at my last year's tax return, and I said: 'Better cut back those charitable deductions.'"Susswein added that the bill "cannot be overstated in terms of the impact" on charities and nonprofits that rely on individual contributionsA new tax on highly paid employees at nonprofit organizations is also likely to hurt colleges and universities – particularly schools with competitive athletic programs and high-profile coachesUniversities also get the short end of the stick with the introduction of an excise tax on particularly large institution endowments.Real estate received a bit of a mixed bag in terms of benefits and added costsOn the one hand, fears have arisen that limitations on state and local tax deductibility – which is particularly relevant to residents of high-taxed states like New York and California – could hurt housing demandLimitations on mortgage interest deductions and other tweaks that affect homeowners are also expected to weigh on the market for second houses and vacation homes."Some house hunters – particularly wealthy buyers – will see an increase in after-tax income making an already tough housing market even more competitive," Joseph Kirchner, a senior economist at, said in a statement last month"This increased demand could drive prices up even higher than they are alreadyAnd changes in the deductibility of mortgage interest and state and local taxes could cause challenges for many homeowners."But in other areas, real estate won out – to such a degree that the last minute support for the bicameral tax bill offered by SenBob Corker, R-Tenn., in mid-December drew criticism when it was discovered that the legislation treated wealthy real estate investors like Corker and Trump particularly favorably.The preservation of favorable language related to like-kind exchanges, depreciation, interest payment deductions and passive losses allow real estate investors to neatly navigate their tax returns with minimal burdenThe progressive Americans for Tax Fairness advocacy group issued a recent report that estimated the new tax plan would save Trump between $11 million and $22 million each year – largely because of favorable treatment for real estate moguls.Oil and gas companies were also big winners – winning increased ability to write-off new equipment expenditures and in part because of the language in the final bill that will open the Arctic National Wildlife Refuge to drilling in a move SenLisa Murkowski, R-Alaska, says will bring the government $1 billion in revenue over 10 years.Manufacturers and miners will also be able to expense costs associated with equipment purchases, helping modernize their operationsAnd, although Trump has previously claimed a simplified tax code would be bad news for planning companies like H&R Block, the next few years are likely to be busy for such outfits as individuals and businesses figure out how, exactly, the new code affects them."You're going to take certain companies that have tax rates in the low 30s or the high 20s and reduce their tax rate to 20 percentThat's going to be a benefit," Jaret Seiberg, managing director at Cowen Research Group, told Bloomberg in an interview last month"One area is banksBanks have among the highest effective tax ratesSo if you take their rate of around 30 and bring it down to 20, that's pretty good for those companies."Other industries were considered winners simply because previous iterations of House and Senate tax legislation would have hit them a lot harderCertain architects and engineers, for example, will not be considered service providers in the same vein as, say, lawyers and doctors in the new tax billLawmakers had previously toyed with the idea of looping architecture and engineering into a group that wouldn't be able to access a new 20 percent "pass-through" deduction, but they scrapped those plans during the recent series of bicameral conference negotiations.The addition of a new one-time reduced tax on international earnings held outside of the reach of the Internal Revenue Service further broadens the list of tax winners to include tech and pharmaceutical companies, among others, that have trillions of dollars stashed offshore.The ultimate question, though, is what businesses decide to do with their newly reduced rates and repatriated earningsCertainly, the diversity of companies that have already come forward promising investments and bonuses to their workers supports GOP lawmakers' argument that the tax cuts – which will add $1.5 trillion to America's debt burden over 10 years – will stimulate growth and business activity within the U.S., ultimately to the benefit of the country's workforce.Boeing, Comcast, AT&T and Wells Fargo have all announced plans to raise wages, distribute year-end bonuses or increase their investments in the U.Sover the years to come as a result of the new tax billSteve Witkoff, a New York-based real estate developer, also announced the bill would allow him to move forward on a Las Vegas casino project expected to create 6,000 hotel and hospitality jobs and 5,000 construction jobs.But some of these public relations pushes are worth a closer look: AT&T's bonus announcement came as the company is pleading its case to Trump's Department of Justice over a proposed merger with Time Warner and also appears to have been locked in prior to the tax bill's passage as a result of union negotiations.And Witkoff, who told U.SNews earlier this year that he's been personal friends with Trump for decades, may ramp up construction once the tax bill kicks in and allows business owners to write off certain capital expendituresBut he was always expected to move forward with the project after taking part in a $600 million purchase of the property in August from billionaire investor Carl Icahn – who also has long-standing connections to Trump and resigned from an unpaid White House advisory position earlier this year.As The Motley Fool's Travis Hoium wrote in September: "You don't spend $600 million on a hotel that's 70 percent complete if you don't plan to eventually open it to guests."Few question whether companies will benefit from Trump's new tax plan – it's expected that a variety of businesses in a variety of sectors will do very wellBut whether that success translates into long-term job creation and wage gains remains to be seen."I thought that the most telling point about this bill came when Gary Cohn asked that room full of executives [in November] whether any of them planned to hire more people because of the tax cut, and nobody raised their hands," Seiberg said"It's a problem with this billWhat these companies are incentivized to do is to put back capital to the best use possibleAnd, in a lot of cases, that means buying your stock if you think it's undervalued."Indeed, some experts note that the lower tax rate on repatriated earnings is an exercise the country has seen beforeA similar plan was passed more than a decade ago under former President George WBush, and the corporate benefits of the repatriation holiday disproportionately went to share buybacks."Some will raise wagesSome will buy companiesSome may do dividends and buybacksDon't act like that is a bad thingThat is their money," Jamie Dimon, chairman and CEO of JPMorgan Chase, head of the Business Roundtable advocacy group and a vocal tax overhaul proponent, said last month during an event hosted by Axios.It's likely wage adjustments, job creation, share buybacks and other financial moves will vary by company and by industryBut some concern has even arisen that certain aspects of the bill may cancel out congressional aspirations such as stronger job creation.Companies that write off purchases of new equipment, for example, will be able to more quickly ramp up productivity and bring their respective workforces in line with the latest technologyBut that's problematic for industries susceptible to automation, as new equipment could lead to fewer jobs.Just days after announcing its new employee bonus program, AT&T announced it planned to lay off hundreds of workersIn a statement that circulated in late December, the company cited "technology improvements [that] are driving higher efficiencies" as one of the reasons driving the layoffs.AT&T also said "many of the affected employees have a job offer guarantee that ensures they'll be offered another job with the company" and that they aim to help "as many of them as possible" find new work.But the fact that the company planned layoffs for so many workers shortly after promising to ramp up investment in the U.Sgoing forward doesn't bode particularly well for low-skilled workers who could end up getting phased out."How can you lay people off and then give them $1,000 and say that there's going to be more jobs available? I wish someone could tell me how that's possible because I have to explain that to my members, and right now at this time of year, this is a difficult pill to swallow," Joseph Blanco, president of Local 6360 Communication Workers of America Union, recently told Fox4 Kansas City"It makes no sense."

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