MADISON, Wis. — A new ad by a Democratic-aligned PAC alleges a tax policy U.S. Sen. Ron Johnson voted for in 2017 amounted to kickbacks for wealthy GOP donors.
It is true that two Republican families that donate heavily to Republican candidates benefitted from the tax plan, but that is because their companies are organized similarly to a broad swath of businesses in the country.
The vote hearkens back to a GOP-authored tax cut plan during the Trump administration. Johnson was among a handful of Republican holdouts on the bill, but his caucus got him on board by approving a plan targeting “pass-through” businesses.
“Pass-through” businesses are a way to structure a business to reduce the overall taxes that are paid as part of the business. Income is passed through the business itself, and is reported as income by the business owners and taxed on the back end.
More than 90% of businesses in the country are structured this way, according to data from the Brookings Institution.
Under Johnson’s plan, the amount of business income that is deductible increased, allowing business owners to deduct 20% of that income instead of 17.4%.
This helped out two key Johnson donors, according to reporting from ProPublica. Liz and Richard Uihlein and Dianne Hendricks both stood to benefit by upwards of $500 million over eight years, according to the reporting. Between the two families, they gave a combined $20 million to Johnson’s 2016 campaign.
Johnson, however, said that the goal of the tax break was to support that large category of businesses, not just the businesses of his donors.
Ad targets Johnson over Social Security policy
The ad also takes shots at Johnson over votes it said would raise the retirement age and allow for cuts to Social Security. While the claim is true, it could use some clarification.
Johnson has all along said he does not want to put Social Security “on the chopping block.” The ad refers to a proposal that Johnson put forward earlier this year to move the program out of the entitlement part of the budget to the discretionary budget that gets reauthorized each cycle. While it is true that Johnson wanted that move to happen, it does not necessarily mean that he wants to see cuts to the program.
On the flip side, Johnson did support a proposal by Kentucky Sen. Rand Paul in 2013 that would, among other changes, raise the retirement age for Social Security to 70 over a 20-year period.
How we got here, the sources used in this Reality Check:
The ad was bought for by Senate Majority PAC, which works to elect Democratic U.S. senators. It can be found here.
Context for Johnson’s 2017 proposal can be found here.
Background on pass-through businesses can be found via the Brookings Institution here. Additional information can be found via the Tax Foundation here.
ProPublica’s reporting can be found here.
Johnson’s stance on Social Security has been reported by News 3 Now and can be found here.
Johnson’s vote on the 2013 Paul proposal is recorded here.
You can see more Reality Checks of political ads running locally here.
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