Being an altruist, Sen. Steve Daines held Pres. Donald Trump’s tax reform bill hostage until Trump and Congress allowed larger tax deductions for “pass-through” businesses. Those are businesses that file as partnerships and sole proprietorships, for example, and whose income is taxed as individuals, not corporations.
“After weeks of fighting for Main Street businesses including Montana’s farmers and ranchers, I’ve decided to support the Senate tax cut bill which provides significant tax relief for Main Street businesses,” Daines said in a statement.
Thing is, it’s the millionaires who make out like bandits under the new “pass-through” tax code, as NBC News reported this week:
The wealthiest Americans will benefit the most from President Donald Trump’s tax deduction for owners of “pass-through” businesses, according to a congressional report released Monday … (it) will shower $40.2 billion in tax breaks on owners of pass-throughs — largely businesses owned by an individual or a partnership, or those “S” corporations that kick income and losses to shareholders for tax purposes.
In 2018, the lion’s share of the benefit — $17.4 billion, or 44.3 percent of the total — will go to roughly 200,000 Americans making $1 million or more who claim the pass-through deduction, the committee said. Another $3.6 billion, or 8.9 percent, will go to a similar number of taxpayers who earn $500,000 to $1 million.
If I remember correctly, Daines is in that 44.3 percent “making $1 million or more.”
Before Daines got involved, the pass-through was pegged at 17.4 percent. He got it bumped to 20 percent. Now a 2.6 percent increase might not seem like much but on $1 million that’s a cool $26,000 and I can guarantee you that Daines is going to save much more than that.
To recap, the nonpartisan Tax Policy Center states:
Pass-through income from partnerships, S-Corps and LLCs is highly concentrated toward the top of the income distribution.
The vast majority of pass-through businesses are small, defined as having total income and total deductions of less than $10 million each. But there are a handful of very large pass-throughs, including law firms, hedge funds and multibillion-dollar businesses like Georgia-Pacific (a Koch Industries subsidiary) and Fidelity Investments, that claim an outsized share of pass-through income.
Damn. I should have thrown my hat in the ring for a U.S. Senate gig. Then I could advance a tax policy that benefits political bloggers and also rolls back the federal excise tax on single-barrel bourbon.