Thread by @propublica

A pair of billionaire donors to @SenRonJohnson's reelection campaign stand to reap more than $500 million in tax savings thanks to a provision Johnson fought to expand in the Trump 2017 tax cuts.

The latest from the Secret IRS Files (THREAD):

propublica.org/article/secret…

2/ With the deadline looming for Congress to finalize Trump's signature Tax Cuts and Jobs Act, Johnson threatened to vote against the bill.

“If they can pass it without me, let them,” he said.

3/ Johnson's demand? That the bill must increase tax deductions for owners of "pass-through" businesses, i.e., companies where profits pass to the owners as income.

4/ The Trump tax cuts initially allowed pass-through owners to deduct up to 17.4% of profits on their personal tax returns, but Johnson wanted that number increased.

5/ Trump personally called Johnson to beg for his support. Within 2 weeks, the bill’s authors fattened the tax cut for pass-throughs.

Effectively, it means a business owner gets to keep an extra $.07 on every $1 of profit.

6/ While many small businesses got a modest tax break from the pass-through cut, a recent study by Treasury economists found that the top 1% of Americans by income have reaped nearly 60% of tax savings created by the provision.

7/ In fact, most of that amount went to the top 0.1%.

That’s because even though there are many small pass-through businesses, most of the pass-through profits in the country flow to the wealthy owners of a limited group of large companies.

8/ In the first year after Trump signed the legislation, just 82 ultrawealthy households collectively walked away with more than $1 billion in total savings.

9/ Like Dick and Liz Uihlein, majority owners of the packaging giant Uline. You've probably seen their logo on countless grocery bags, cardboard boxes, or even surgical masks.

10/ @Uline produced nearly $1B in profits in 2018, according to our analysis of tax records. While Dick & Liz Uihlein reported more than $700M in income that year, the pass-through tax cut allowed them to claim a stratospheric $118M deduction generated by the new tax break.

11/ The Uihleins, who have advocated for tax cuts, gave more than $8M in 2016 to political committees supporting Johnson's reelection campaign and attacking his opponent Russ Feingold.

12/ The resulting political ad blitz led the Milwaukee Journal Sentinel to dub the Uihleins “the Koch brothers of Wisconsin politics.”

archive.jsonline.com/watchdog/noqua…

13/ Johnson’s campaign also got a boost from Wisconsin’s richest woman, billionaire Diane Hendricks of roofing wholesaler ABC Supply Co., who has publicly pushed for tax breaks and said she wants to stop the U.S. from becoming “a socialistic ideological nation.”

14/ In 2016, Hendricks gave about $12 million to a pair of political committees, the Reform America Fund and the Freedom Partners Action Fund, that bought ads attacking Feingold.

15/ In the first year of the pass-through tax break, Hendricks got a $97 million deduction on income of half a billion dollars. By reducing the income she owed taxes on, that deduction saved her around $36 million in that year alone.

16/ At this rate, the tax change that Johnson fought to expand could deliver more than $500 million in tax savings for just these two families over the course of the tax cut's 8-year statutory life.

17/ In response to emailed questions, Johnson didn't address whether he'd discussed the expanded tax break with Hendricks or the Uihleins. Instead, he wrote in a statement that his advocacy was driven by his belief that the tax code “needs to be simplified and rationalized.”

18/ “My support for ‘pass-through’ entities — that represent over 90% of all businesses — was guided by the necessity to keep them competitive with C-corporations and had nothing to do with any donor or discussions with them,” reads the statement.

19/ A spokesperson for the Uihleins declined to comment. Representatives for Hendricks didn’t respond to questions.

20/ This is only part of the latest story from @JustinElliott & @RobertFaturechi .

Get all the details on how America’s wealthiest business owners reaped a windfall from last-minute changes to the Trump tax bill:

propublica.org/article/secret…

@JustinElliott @RobertFaturechi 21/ And catch up on the full Secret IRS Files series here:
propublica.org/series/the-sec…

@JustinElliott @RobertFaturechi 22/ The Secret IRS Files is an ongoing reporting project.

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