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Sen. Ron Johnson Goes to Bat for Subchapter S

Republican Sen. Ron Johnson of Wisconsin has come out against the Senate Republican tax plan, saying it does not do enough for small businesses organized as Subchapter S corporations.
Sen. Ron Johnson Goes to Bat for Subchapter S
November 21, 2017

Republican Sen. Ron Johnson of Wisconsin has come out against the Senate Republican tax plan, saying it does not do enough for small businesses organized as Subchapter S corporations.

As small businesses, many PIA independent insurance agencies are organized as sole proprietors, partnerships, or S corporations. As such, they do not pay the current corporate income tax. Instead, their income “passes through” the firm and appears directly on their owners’ individual tax returns, where it is taxed as normal income. Lowering the rate for these small and often family-owned businesses will ease the undue burden many businesses face when calculating their tax liabilities.

“(I)t is important to maintain the domestic competitive position and balance between large publicly traded C corporations and ‘pass-through entities’ (subchapter S corporations, partnerships and sole proprietorships),” said Johnson. “These businesses truly are the engines of innovation and job creation throughout our economy, and they should not be left behind.”

“Unfortunately, neither the House nor Senate bill provide fair treatment, so I do not support either in their current versions. I do, however, look forward to working with my colleagues to address the disparity so I can support the final version,” he said, telling the Wall Street Journal, “If they can pass it without me, let them. I’m not going to vote for this tax package.”

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