Photo credit: Gage Skidmore
Taxpayers are just beginning to learn how much financial corruption President Trump and Republican politicians managed to pack into the enormous $2.2 trillion coronavirus economic stimulus package to further enrich themselves and their millionaire and billionaire supporters.
It goes far beyond all those multimillion-dollar corporations draining more than billion dollars from a taxpayer-funded program that was supposed to help struggling mom and pop small businesses. Of particular interest to Wisconsin should be a hidden $90 billion tax cut in 2020 (ultimately growing to $170 billion over 10 years) with 82% of the benefits going to about 43,000 very wealthy taxpayers earning more than $1 million a year.
You know some of those recipients very well. That’s because the tax cut is a pet project of Wisconsin Republican Sen. Ron Johnson. It applies to real estate investments legally organized as “pass-through” businesses. Johnson and his wife happen to be owners of four of them, including 100% of a commercial real estate company worth between $5 million and $25 million and a smaller share of another company worth up to $5 million, according to his financial disclosure forms. In 2017, when Republicans passed their enormous tax cut for millionaires, billionaires and corporations costing $1.5 trillion over the next decade, Johnson publicly refused to vote for the bill until it included a bigger tax cut for his own “pass-through” businesses.
Johnson’s victory was never really in doubt under Trump. Trump’s family businesses include hundreds of “pass-through” business entities. Trump’s daughter Ivanka and son-in-law Jared Kushner are reported to own hundreds of their own. But the tax cut Johnson won for himself and the president in 2017 had two limitations. Owners of “pass-through” businesses could deduct only 80% of any losses from their personal income taxes up to a maximum of $500,000 for a couple filing jointly like, say, Ron and Jane Johnson or Donald and Melania Trump.
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Self-Centered, Incompetent
The current deadly coronavirus pandemic may ultimately end the Trump presidency by fully exposing Trump’s self-centered ignorance, incompetence and failure to protect American lives during one of the worst national health crises in U.S. history. But it also gave Trump and his Republican co-conspirators a golden opportunity to come back for another huge helping of tax cuts for themselves and their wealthy friends while everyone else is distracted by tens of thousands of dying Americans.
The $2.2 trillion coronavirus economic stimulus bill was the perfect place to hide outrageous stuff. It was an 883-page “must-pass” bipartisan bill no Senator or House member was ever likely to read in its entirety chock full of vaguely defined appropriations of hundreds of billions of dollars. It ultimately passed the Senate 96-0 (with four Republicans unable to vote because of illness or quarantine) and the House by an overwhelming voice vote without recording individual members.
The Washington Post’s Jeff Stein was one of the few to report the tax changes for “pass-through” businesses added by Senate Republicans. When last-minute changes are made, the senators pushing them usually go unnamed to protect the guilty. But it’s a safe bet Johnson, the public champion and private beneficiary of “pass-through” businesses, was a supporter. The addition was made so late in the process the bipartisan Joint Committee on Taxation did not provide an estimate of the tax cut’s cost until the day after the Senate voted.
Big Tax Giveaway
Here’s what they got away with: The change eliminates all limits on deducting losses from “pass-through” businesses. Owners can now deduct 100% of losses and blow past the $500,000 maximum deduction for couples. Proving the enormous tax giveaway is totally unrelated to the economic collapse from the coronavirus, the change is retroactive allowing owners to deduct “pass-through” business losses from 2018 and 2019 as well. That was when the economy was continuing the longest economic expansion in U.S. history that began under President Barack Obama in June 2009. Trump and coronavirus brought that economic success to an abrupt halt this spring.
The Joint Committee on Taxation estimated the 43,000 owners of “pass-through” businesses who earn more than $1 million a year will receive an average windfall of $1.6 million this year from the hidden tax cut. Think about that when you get the $1,200 that’s considered your share of the money provided in the same coronavirus economic stimulus bill.
“It’s a scandal for Republicans to loot American taxpayers in the midst of an economic and human tragedy,” said Democratic Sen. Sheldon Whitehouse of Rhode Island, who requested the analysis by the Joint Committee on the cost and who benefits. “Congress should repeal this rotten, un-American giveaway and use the revenue to help workers battling through this crisis.”
Any elected official who intentionally twists legislation intended to ease human suffering and economic destruction during a pandemic to fill his own pockets needs to be socially distanced from public office permanently.
