Still More Tax Breaks for Ron Johnson

As Urban Milwaukee has previously written, Republican US Senator Ron Johnson avoided paying up to $3.5 million in federal taxes by loaning himself between $1 million and $5 million from the Pacur LLC company he owned in 2004, and loaning himself another $1-$5 million in 2007. Johnson then had to pay only interest payments on the loan, which were paid back to the company he owned, while he paid not a dollar in income taxes on the payoff he got from the company.

But it turns out he has evaded taxes in another way, as Madison TV station WKOW reported yesterday. Checking tax records obtained from the Wisconsin Department of Revenue, WKOW found that “a trust fund started by Republican Sen. Ron Johnson hasn’t paid any Wisconsin taxes since 2016. Before then, the fund paid hundreds of thousands of dollars each year in state taxes.”

Johnson used the trust fund to purchase a million-dollar house in Washington, D.C., the story noted, and “Johnson then paid rent to the trust when he stayed in the house while conducting Senate business.” But he hasn’t paid taxes on the trust fund since 2016.

Tax records showed “the Ronald Johnson and Jane Johnson Irrevocable Endowment Trust paid between $400,000 and $920,000 annually in state taxes between 2011, when Johnson was sworn into his first term as a U.S. Senator, and 2015,” the station reported.

“From 2016 on, however, the trust fund didn’t pay a single cent in state taxes. Johnson’s campaign said it was because the fund was able to apply for Wisconsin’s Manufacturing and Agriculture Tax Credit.

“State Republicans, under former Gov. Scott Walker, enacted the credit in 2011. It took effect in 2013 and scaled up in size to its current level of 7.5% in 2016, the same year Johnson’s trust fund no longer owed any state taxes.”

The Manufacturing and Agriculture Tax Credit was a massive giveaway to wealthy people like Johnson: 79 percent of the credit goes to individuals with an income of more than $1 million, and 21 individuals with an adjusted gross income of $30 million or more a year received $38.9 million in tax breaks, the Legislative Fiscal Bureau found.

Democratic strategist Joe Zepecki told WKOW the tax break for Johnson’s family trust fund symbolizes a broken tax structure. “We know that the system has been rigged by people like Senator Johnson for people like Senator Johnson for way too long,” Zepecki said.

Another example of this was Johnson’s push to make sure President Trump‘s 2017 Tax Cuts and Jobs Act added a tax break for pass-through companies (businesses that pass income onto their owners, and are not subject to corporate income tax).

Johnson has admitted that he benefitted personally from this tax break. “Now, did my business benefit? Sure,” he said.

But the bigger gain may have been for key supporters of Johnson. As Politifact reported, an April 2021 study by the National Bureau of Economic Research found that the top 1% of Americans by income have received nearly 60% of the tax savings created by the provision championed by Johnson. Most of that amount went to the top 0.1%, the study found.

“Confidential tax records… reveal that Johnson’s last-minute maneuver benefited two families more than almost any others in the country — both worth billions and both among the senator’s biggest donors,” a story by Pro Publica reported. “Dick and Liz Uihlein of packaging giant Uline, along with roofing magnate Diane Hendricks, together had contributed around $20 million to groups backing Johnson’s 2016 reelection campaign.” They could easily afford that as the provision championed by Johnson netted the two families $215 million in tax deductions in 2018 alone.

And they continue to pay Johnson back. As of August the two families had contributed $9.5 million to the Super PAC backing Johnson’s reelection in 2022.