The Corner

Politics & Policy

Ron Johnson, Pro Publica, and Simple Math

Sen. Ron Johnson (R., Wis.) asks questions during the Senate Homeland Security and Governmental Affairs/Rules and Administration hearing to examine the January 6, 2021 attack on the U.S. Capitol in Washington, D.C., March 3, 2021. (Greg Nash/Pool via Reuters)

Another morning, another Ron Johnson smear piece on the front of the Appleton Post-Crescent, a newspaper operated by the USA Today Network. The headline reads “Benefitting the Rich.” Written by Justin Elliott and Robert Faturechi of Pro Publica, the piece details how in 2017 Johnson ensured that “pass-throughs” — a spooky catch-all term for LLCs, S-corps, partnerships, and sole proprietorships — had their tax burden reduced like C-corporations. 

Johnson explained the move, saying, 

Earnings at C-corporations saw a tax reduction via the corporate income tax rate from 35% to 21% while earnings at pass-through corporations would have been taxed at a top personal income rate of 38.5%, a great competitive disadvantage.

The original pass-through deductions would have effectively reduced this rate to 35.6% for pass-through entities, still a large disadvantage. My effort reduced the rate on pass-through income to 29.6%, still higher than the rate on C-corporation earnings but less of an unfair differential.

Seeing as a majority of businesses in the U.S. are pass-throughs, not monolithic C-corps such as Coca-Cola, I raise my morning cup of coffee to the senator. 

The Pro Publica writers are hilarious covering this. They scribe, in the hushed, over-wrought tones that journalists are prone to when they feel they have a juicy bit of info, that

The Trump administration championed the pass-through provision as tax relief for “small businesses.

Confidential tax records, however, reveal that Johnson’s last-minute maneuver benefited two families more than almost any other in the country — both worth billions and both among the senator’s biggest donors.

I land towards the former between innumeracy and trigonometric competence, but the math is pretty easy here. People who make more money save more from reduced taxes than those who make less. 

Simple example: 

You make $1 million

Taxed at 38.5 percent Tax due $385,000 Take home $615,000

Taxed at 29.6 percent Tax due $296,000 Take home $704,000

Savings from tax reduction $89,000

Let’s say you’re a small-business owner now: 

You make $300,000

Taxed at 38.5 percent Tax due $115,500 Take home $184,500

Taxed at 29.6 percent Tax due $88,800   Take home 211,200

Savings from tax reduction $26,700

The small-business owner got ripped off! The bigger business owner received $62,300 more in tax relief! Tosh, the higher earner made more money and paid more total tax. 

You never see in these breathless articles anyone note just how much the likes of Johnson’s donors pay in taxes — only what they “saved” from the relief. Probably because these billionaires pay a metric tonne to our benevolent government and showing it is so undercuts the story-crafting that a bunch of fatcats are wandering the countryside, paying not a red cent in tax. 

Also, this idea that rich people donate more should be self-evident. It’s hard to drop $20,000 on a PAC function when working at Applebees. 

Maybe this is just my Wisconsinite solidarity, but the USA Today Network has been after Johnson much of this year. I’m inclined to think their reasons for this piece and others are political instead of holding public officials equally to account. 

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