Sen. Ron Johnson (R-Wis.) has come out against the Senate Republican’s tax bill, the Tax Cuts and Jobs Act, according to a Wall Street Journal report.
“I realize what’s about to happen to me, OK?” Sen. Johnson told the WSJ. “I’m giving them fair warning to do a good tax bill. I’ve been giving them fair warning for months.”
His issues with the current piece of legislation are two-fold: He believes it favors corporations over “pass-through” entities, which include S Corporations, limited liability partnerships, and sole proprietorships. Most small businesses are set up as pass-throughs.
The current legislation would lower the corporate tax rate from 35% to 20%. The rate for pass-through entities is over 30% in the Senate bill and 24% in the House version.
While both corporations and “pass-through” entities would lose some tax breaks, corporations would get $1.3 trillion in gross tax cuts, while “pass-throughs” would get $362 billion in gross tax cuts.
Corporations and pass-throughs currently have different tax structures. In a pass-through, “individual owners of a business pay taxes on income derived from that business on their personal income tax returns,” according to Cornell Law School, whereas corporations pay “corporate taxes on income the corporation derives.” Some corporations are taxed twice, first at the corporate rate and then when they pay dividends, WSJ explains. Sen. Johnson has proposed a plan that would tax corporations like pass-through entities, but it has not gained traction, and the Joint Committee on Taxation has not yet analyzed the plan to see how it would impact the government’s ability to raise revenue.
Johnson was also put off by the bill’s legislative process—and now he claims officials in Trump administration say it’s too late to change the bill.
“It’s not like I’m just coming out of the woodwork all of a sudden raising it,” he explained. “I’ve been talking to my colleagues a long time. I presented my idea months ago.”
Senate Republicans can only afford to lose two votes and still pass this legislation, which President Trump would like to sign before Christmas, giving him a major legislative win after the failure to pass a healthcare overhaul. Several other Republican senators have expressed misgivings about the bill, but Johnson is the first to say that he won’t support it.
“If they can pass it without me, let them,” Sen. Johnson told the WSJ. “I’m not going to vote for this tax package.”