ICYMI: Milwaukee Journal Sentinel – Ron Johnson fought for a tax cut as his family was amassing luxury real estate around the country

Nov 04, 2022

ICYMI: Milwaukee Journal Sentinel – Ron Johnson fought for a tax cut as his family was amassing luxury real estate around the country

“Republican Sen. Ron Johnson has acknowledged that a major provision he fought to insert into former President Donald Trump’s signature 2017 tax bill helped his old plastics firm…What he didn’t say was how much it could be benefiting members of his family.”

MADISON, Wis. — A new report details how Ron Johnson used his position in the Senate to support various tax loopholes that likely allowed his family and mega donors to avoid paying their fair share in taxes.

Key Points:

Milwaukee Journal Sentinel: Ron Johnson fought for a tax cut as his family was amassing luxury real estate around the country

  • Republican Sen. Ron Johnson has acknowledged that a major provision he fought to insert into former President Donald Trump’s signature 2017 tax bill helped his old plastics firm and many others financially.

  • What he didn’t say was how much it could be benefiting members of his family.

  • Records show that Johnson’s three adult children are the beneficiaries of a family trust and are listed as managers of about 10 companies registered with the state Department of Financial Institutions. Many of the companies also list Johnson’s wife, Jane, as a manager.

  • Those LLCs and the family trust own about two dozen properties around the nation with assessed values of $21 million, according to a Milwaukee Journal Sentinel review of property records and other documents.

  • The Johnson family’s real estate investments include two waterfront homes with sweeping views worth a combined $3 million on the picturesque San Juan Islands in the state of Washington; four condominiums near a ski resort in Park City, Utah; three Florida houses worth a total of $4 million; a $1.5 million Washington, D.C., townhouse on Constitution Avenue; and two Fish Creek condominiums in Door County.

  • Johnson and his wife also have an LLC that owns the building and property for Pacur LLC, the Oshkosh plastics firm he sold in 2020. On his U.S. Senate financial disclosure form, Johnson said he receives between $100,000 and $1 million annually in rent on the property valued from $5 million to $25 million.

  • The two Johnson family companies that own the most properties are JFT Investments and Atlas Capital RE.

  • Two properties on San Juan Island in the state of Washington were purchased in 2017 and 2020 by JFT Investments LLC. The company is managed by Ron Johnson’s wife Jane and son Ben.

  • Both were described as corporations that “acquire, own, manage, lease, develop or sell real estate” in documents filed with DFI in March. The two managers were listed as Johnson’s son, Benjamin, and Jane Johnson, who signed the paperwork for both companies.

  • Records for at least three of JFT Investments’ properties, including one deed, listed Ron and Jane Johnson’s Oshkosh home as the mailing address for the company. The firm is not listed on Johnson’s financial disclosure form, meaning neither he nor his wife could have received more than $200 a year in income from the company.

  • In May, Johnson and his wife listed assets worth between $16.55 million and $78.3 million, about the same as the previous year. Johnson wasn’t required to list his annual $174,000 Senate salary.

  • On a number of occasions, the Wisconsin Republican has complained that he has only doubled his wealth since taking office in 2011, arguing that he could have made much more had he not taken all of his “marketable securities” and placed them in cash.

  • In 2017, Johnson held up passage of Trump’s tax bill by objecting to the plan’s already generous tax break for pass-through businesses. Originally, the Trump administration proposed allowing business owners to deduct up to 17.4% of their profits. Johnson fought to increase that to 23%. The figure ended up at 20%.

  • Several studies have found that the tax cut primarily helped the wealthy and especially the ultrawealthy. A 2021 report by economists for the National Bureau of Economic Research concluded that the top 1% of Americans by income had received nearly 60% of the tax savings created by the provision. Most of that amount went to the top 0.1%.

  • Ross Milton, an assistant professor at La Follette School of Public Affairs at the University of Wisconsin-Madison, said the pass-through provision is “still a hotly debated topic among tax policy people.”

  • “I think these pass-through provisions have been criticized because much of the benefit of them goes to very high income and/or high wealth households,” Milton said. “And presumably the Johnson family is a high-income household.”

  • Last year, ProPublica, an investigative journalism organization, found that the tax cut was a boon for some of Johnson’s biggest donors.

  • Dick and Liz Uihlein, the owners of packaging giant Uline in Pleasant Prairie, and Diane Hendricks, the billionaire founder of roofing company ABC Supply in Beloit, together reported $215 million in tax deductions in 2018 due to the changes Johnson backed. Those deductions resulted in more than $79 million in tax savings for the two families in 2018 alone, ProPublica reported.

  • This year, the Uihleins and Hendricks have poured $22.5 million into Wisconsin Truth PAC, including $3.1 million from Hendricks last week alone. As of Oct. 19, Wisconsin Truth PAC had spent more than $24 million on ads attacking Barnes.

  • During negotiations over the pass-through provision, Milwaukee businessman Ted Kellner sent a letter to Johnson complaining that the tax carve-out would not be available to many real estate developers. That’s because the provision capped the tax break based on the amount a company paid in wages; real estate developers often have large assets but small payrolls.

  • “Dear Ron,” Kellner and a colleague wrote in a letter obtained by ProPublica. “I’m concerned that the goal of a fair, efficient and growth oriented tax overhaul will not be achieved, especially for private real estate pass-through entities.”

  • Johnson forwarded the letter to Senate and House Republican leaders. In final negotiations, lawmakers allowed real estate developers to use a combination of wages and qualified depreciable property in determining the amount of their tax deductions.

  • According to federal records, Kellner and his wife, Mary, have given Johnson’s campaign and the Ron Johnson Victory fund $105,142 since January 2017, with more than $90,000 of that coming this year. Overall, the couple has written checks for nearly $1.1 million to Republican interests over the past six years. The two have given to Democrats as well, including $75,000 to President Joe Biden in 2020, but not nearly as much as they have donated to GOP parties and candidates.

  • Aaron Mandell, assistant accounting professor at the University of Wisconsin-Milwaukee, said virtually all LLCs are pass-through entities but not all LLCs qualify for the tax deduction.

  • This isn’t the first time that Johnson’s political career has bumped up against his family’s business interests.

  • In 2011, he began renting a 2,430-square-foot brick townhouse on Constitution Avenue that is now assessed at $1.5 million. That’s a considerable increase from what the Ronald H. Johnson and Jane K. Johnson Irrevocable Endowment Trust paid in cash for the stately residence.

  • Johnson used a private plane owned by his adult children to travel between Wisconsin and Washington, D.C., during the deadly COVID-19 pandemic in 2020. The Journal Sentinel reported that Johnson, one of the wealthiest members of the U.S. Senate, took more than a dozen flights between May and October 2020 on a small business jet registered to Howard Air LLC.

  • The second-term senator quit flying commercial as he was warning of a “level of unjustifiable hysteria” in the public around coronavirus.

  • More recently, Johnson voted for Trump’s tax plan, which allowed those buying private jets to write off the full amount of their new plane’s cost on their tax returns.

  • Since the tax break was approved, Howard Air has bought three new planes, including a Pilatus PC-24, valued at $12 million, that was purchased this past summer. Benjamin Johnson and Jane Johnson are listed as the managers of Howard Air in corporate records filed with the state.

  • Also, Johnson came under attack from Democrats for billing taxpayers to cover the cost of flights between a Florida family vacation home and Washington, D.C., including nine such trips last year.

  • In all, Johnson was reimbursed for 19 flights between 2013 and May 2021, costing taxpayers between $5,418 and $18,718. JFT Investments bought the 3,400-square-foot waterfront estate in Fort Myers, near Sanibel Island, for $1.6 million in October 2013.

  • JFT Investments used to share the same address with Pacur, the Oshkosh plastics company formerly owned by Johnson.