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On tax day, Sen. Johnson defends tax cut that benefitted himself, top donors

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Ron Johnson was at the heart of an addition to the 2017 Republican tax cuts that affected most businesses.

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OREGON (WKOW) -- Following a wide-ranging conversation with firefighters and paramedics in this village of about 11,000 south of Madison, Sen. Ron Johnson defended the tax cut provision he demanded more than four years ago - one his political opponents hope will damage his re-election efforts this fall.

In late 2017, Johnson withheld his support for the sweeping Republican tax cut plan under former Speaker Paul Ryan and former President Donald Trump.

Johnson insisted on raising the amount business owners could deduct on the 'pass-through' tax provision. The move had an outsized benefit on high earners, including two of Johnson's biggest donors.

While large, publicly traded corporations like McDonald's and Apple are tax on the businesses themselves, the vast majority of companies are taxed as pass-through entities. For those businesses, profits pass through to the owners, who then pay taxes on that revenue as part of their income taxes.

Johnson successfully pushed his colleagues to allow pass-through business owners to deduct up to 20 percent of their profits. A report from the nonpartisan Joint Committee on Taxation, which reports to Congress, estimated that by 2024, the tax cut would amount to $60 billion in savings with 60 percent of that money staying in the pockets of owners taking in more than $500,000 per year.

When asked about the findings Monday, Johnson said it was a natural byproduct of big earners paying a larger share of taxes.

"When you start talking about taxation, if you cut taxes for everybody, everybody gets a tax break," Johnson said. "And people that make more money get more dollars cut but that's our tax system."

Democratic critics, including those vying to unseat Johnson in November as he seeks a third term in the U.S. Senate, accuse the Oshkosh Republican of tilting the system in his own favor.

"I'm not surprised that Ron Johnson is defending the tax cut for himself and his biggest donors that he put into law because it's been a windfall for him," Democratic Party of Wisconsin Chair Ben Wikler said. "It just hasn't trickled down to benefit everybody else."

A 2021 report from ProPublica obtained confidential tax records of some of the country's wealthiest owners of pass-through businesses. Its analysis found two of the three biggest beneficiaries were Wisconsinites among Johnson's biggest donors. 

The top beneficiary, Michael Bloomberg, saved $67.87 million in 2018 alone. Bloomberg ran unsuccessfully for President as a Democrat in 2020.

The second and third biggest beneficiaries were Dick and Liz Uihlein, owners of Uline Packaging in Pleasant Prairie, and Diane Hendricks of Beloit-based ABC Supply Co. The Uihliens saved $43.53 million in 2018 while Hendricks saved $35.91 million.

The Uihleins gave Johnson's campaign fund about $280,000 in the last quarter per FEC filings due last Friday.

Johnson has admitted he personally benefited from the expanded pass-through provision. He insists that was not the driving factor in his push to add the provision to the 2017 tax cut.

"I did nothing for personal benefit or to benefit a few," Johnson said. "I passed tax reform for the many."

Capitol Bureau Chief