White House: Add-on that could enrich Trump and GOP lawmakers won't jeopardize the tax vote

Key Points
  • A measure that could benefit Americans with real estate income "was not airdropped," White House legislative director Marc Short says.
  • The House and Senate get ready to vote this week on final tax legislation, which blended the bills that passed each chamber of Congress.
  • "Not everyone got everything they wanted in this bill," Short adds, but says that's the way it goes when crafting a compromise bill.
Tax reform down to the wire before the holidays

The addition of a measure that could benefit Americans with real estate income, including President Donald Trump and Republican Sen. Bob Corker, "was not airdropped" into the crafting of the final GOP tax bill, White House Director of Legislative Affairs Marc Short told CNBC on Monday.

"That provision was in the House bill initially. It was not in the Senate bill. But there are a lot of things that come together in a giant compromise like this," Short said on "Squawk Box," as the House and Senate get ready to vote this week on compromise legislation, which blended the two versions of the tax overhaul that passed each chamber of Congress earlier this year.

The White House is encouraged by the final bill and the prospects for passage this week and the president's signature before Christmas, Short said.

Corker, who decided not to seek re-election next year, expressed concern about the real estate add-on after a reporter contacted him about it Saturday. The Tennessee Republican on Friday changed his vote on the overall bill to a "yes."

A statement released by his office on Sunday said Corker was briefed on key differences between the reconciled bill and the Senate version, but he had "no knowledge of the pass-through provision in question." The statement said Corker "requested no specific tax provisions throughout the monthslong debate," noting he was not on the tax-writing committee.

The weekend statement also included a letter that Corker sent to Senate Finance Committee Chairman Orrin Hatch, R-Utah, asking for "an explanation of the evolution of this provision and how it made it into the final conference report."

On Monday, Hatch's office responded to Corker, first by knocking down a report that "implied that you [Corker] had some role in advocating for or negotiating the inclusion," and then confirming the provision was always part of the House approach.

According to Hatch, vice chairman of the conference committee, Corker's concerns about "pass-through businesses in tax reform were to voice skepticism about the generosity of various proposals under consideration."

"Not everyone got everything they wanted in this bill," the White House aide Short added, but said that's the way it goes when crafting a compromise bill.

The real estate-friendly inclusion that's emerged as a flashpoint for critics of the GOP tax bill allows for a deduction on income made from pass-through entities, like real estate LLCs, including those with few or no employees.

Nonpublic pass-through businesses, such as sole proprietors, limited liability companies and partnerships, pay no income tax themselves. Instead their profits "pass through" directly to their owners, who pay tax on them at the individual tax rates.

Tax analysts have expressed worries that wealthy Americans could reap massive windfalls by simply reclassifying their incomes as pass-throughs. Earlier Monday, Scott Hodge, president of the conservative-leaning Tax Foundation, said on CNBC, "Lawyers at the IRS are going to be very busy over the next couple years trying to write rules to prevent that kind of gaming."