Did you hear White House economic adviser Larry Kudlow on Fox News Business, say “The deficit, it’s coming down and it’s coming down rapidly” … ignoring the reality of the task … a $21,140,053,677,467.79 National Debt.
That must have been music to the ears of the Champion of Small Business, Erik Paulsen.
Lower deficits just reinforce his latest bill — H.R.6277 – To amend the Internal Revenue Code of 1986 to make permanent the deduction for qualified business income.
The bill, which “Representative” Paulsen and Utah’s Rob Bishop authored on June 28 seeks to ensure that the tax cut scheduled to sunset in 2025, does not happen.
Good thing that the national debt is going down … ’cause it sure hasn’t recently.
Gosh, wasn’t it just about a year ago, President Trump pledged to eliminate the national debt “over a period of eight years” ?
Oh, yeah, under President Trump and the Republican-controlled Congress, for the first time in history, the national debt has broken the $21 trillion benchmark.
Who should be alarmed ?
Well … the Congressional Budget Office is.
“The prospect of a large and growing debt poses substantial risks for the nation and presents policymakers with significant challenges,” the CBO stated in a recent warning.
Apparently, Congressman Paulsen isn’t worried … he must believe President Trump … and thus his bill to focus on making permanent a tax cut that is set to expire in 2025.
Sure is good that Congressman Paulsen has such trust in President Trump … because he had a different tune when President Obama was in charge …
November 18, 2011
Since our country was first founded, the issue of debt and government spending has been at the forefront of the minds of our political leaders, our national security advisors, our business owners and citizens alike. It’s obvious that our $15 trillion national debt is not a Republican problem, it’s not a Democratic problem; it’s an American problem.
Our debt crisis is a legitimate threat to our Nation’s security and our future. A nation that does not control its debt does not control its destiny
Hmmm at $15 trillion, Congressman was alarmed … now exceeding $21 trillion, “Representative” Paulsen can justify reducing revenues — permanently.
So what’s in the bill ?
Well, it concerns “qualified business income”.
As part of the recently-enacted Paulsen Tax Cut (aka Tax Cuts and Jobs Act or TCJA), a new provision of the Internal Revenue Code was created: Section 199A, which provides a deduction to owners of sole proprietorships (and others) equal to 20% of the income earned by the business.
No doubt when Congressman Paulsen is questioned about this bill, he will claim that he is helping out the “Mom and Pop” small businesses
— Rep. Erik Paulsen (@RepErikPaulsen) November 15, 2017
Sure sounds good doesn’t it … well, a number of sources have reviewed this provision and it turns out that not only will help the “Mom and Pop” small businesses but others too (check out this story in Forbes The Republican Tax Plan’s Break For Small Business Yields Huge Benefits… For Big Business.
Yeah, it helps sole proprietorships but also limited liability companies (LLCs), S corporations, partnerships, real estate investments, trusts, and estates.
While Congressman Paulsen is hyping Glenda and her lawn care business, he is failing to acknowledge what it does for businesses like Karin Housley Enterprises LLC (you know the soon-to-be Senator Housley), The Trump Organization LLC, T Retail LLC (the online retailer Trumpstore.com), Essential Consultants L.L.C (you know the Michael Cohen, Trump’s personal lawyer and longtime fixer, used the shell company, Essential Consultants L.L.C., for an array of business activities), and so many others.
The Forbes article focuses on who really benefits
But it’s not just real estate moguls who are walking away with that $17.8 BILLION in tax savings courtesy of Section 199A. When things line up perfectly, some of the largest businesses in the country are able to operate as a pass through business. For example, many closely-held professional sports franchises are established as S corporations or partnerships. And while it is not clear exactly whether they file as a C or an S corporation, we know that Koch Industries, Inc. — with its $115 billion in annual revenue — is privately held, and thus may very well be operated as an S corporation. The same is true for Cargill, whose annual revenue actually exceeds that of the Koch brothers, making it the largest privately-held company in America. That’s over $250 billion in annual revenue that may be eligible for a Section 199A deduction.
Yep, turns out that Paulsen donors are set to be rewarded.
Koch donating to the Paulsen campaign has been well documented … but the Cargill donations don’t get the same attention.
Fun Fact … reviewing Cargill’s donations for 2016, Erik Paulsen received the most donations (exceeding $20,000) of any candidate including contributions for presidential candidates. And in 2018, Karen Housley has already received $7,400, Jim Hagedorn who is seeking Minnesota’s First District seat has received $10,800, while Pete Stauber seeking the Eight District has received over $4,000.
Forbes says what needs to be done :
Section 199A is poorly constructed for a number of reasons, but from a big picture perspective, the notion that it was created as a boon to small business has long been challenged by tax wonks, and the JCT’s report only confirmed such suspicions. Had the GOP been serious about providing a benefit to Main Street rather than Wall Street, it could have easily capped or phased out the benefits of Section 199A above certain income levels. But it chose not to, and now it must face the unflattering news that its handout to small businesses is dwarfed by the gift given to some of the wealthiest taxpayers in the country.
So while Ma and Pa down at the hardware store may find an extra $4,000 in their pockets courtesy of the new “small business” tax break, the likes of Ma and Pa Trump, Koch and Cargill will walk away with nearly $20 billion.
Forbes has figured it out … and instead of making this provision permanent, Congressman Paulsen should be acknowledging his error … and “reforming” his “tax reform” by putting in the cap … effective now … not waiting for 2025.
But that’s now likely to happen ’cause the Paulsen donors just don’t care about the deficit.
And Paulsen cares about his donors.
Thus, two questions.
Does anyone think that in the heat of the midterm elections that the Republican-controlled Congress will enact “Representative” Paulsen’s legislation ?
Does anyone think that in the heat of the midterm elections that “Representative” Paulsen will remind his donors of his legislation ?