Some business leaders in Wisconsin are applauding the reforms being rolled out in the Republican tax bill, while others are wary about potential problems.
The House and Senate are expected to vote on the legislation sometime this week, so that President Trump can sign it before Christmas.
Kurt Bauer, president and CEO for Wisconsin Manufacturers & Commerce, says comprehensive tax reform, including a lower corporate rate, is “obviously very popular to our business community,” citing a recent WMC survey.
“The 35 percent rate for C-corps is uncompetitive,” he told WisBusiness.com. “It needed to be reformed for us to be competitive with the rest of the industrialized world.”
“In general, we’re very excited that it got done,” said Steve Baas, senior vice president of governmental affairs and public policy for the Metropolitan Milwaukee Chamber of Commerce. “It impacts everyone by being simpler from a business standpoint.”
And, Baas said, it’s better aligned with the goal of economic growth than the existing tax code. That’s in part due to “significant reforms” like the lower corporate tax rate, which would be dropped from 35 percent to 21 percent.
“That’s huge,” Baas said. “That gets us back in the game in terms of international competitiveness.”
More than anything, Bauer argued, this lower rate will help to keep big companies like Johnson Controls from moving to another country with a more competitive rate, like Ireland or Canada.
“That’s one benefit — keeping American companies American,” Bauer said.
Tom Still, president of the Wisconsin Technology Council, calls the GOP tax plan “a bit of a mixed bag.”
“On the one hand, there hasn’t been corporate tax reform in 30 years and it was time for a review,” said. “On the other hand, there appears to be broad consensus that this tax reform could inhibit the nation’s ability to balance the budget and reduce the deficit. Or simply delays the day of reckoning to 2025.”
The plan would preserve the R&D tax credit, which he calls “essential to many tech-based companies and startups.” But he also notes that many might lose their health insurance, “which can be important to entrepreneurs with limited options.”
And Eric Borgerding, president and CEO of the Wisconsin Hospital Association, says some provisions in the package will negatively impact Wisconsin health care, including the repeal of the individual insurance mandate.
“With this provision we see the latest step in the piecemeal deconstruction of Obamacare, but with nothing to replace it, nothing to bridge or transition,” Borgerding said. “This will result in fewer people insured, starting next month, and will most certainly result in higher uncompensated care costs for hospitals and health systems.”
But it’s not all bad, he said, as Congress preserved tax-exempt financing tools for nonprofit hospitals — a position which was advocated by WHA and its members, as well as Gov. Scott Walker, Republican U.S. Rep. Mike Gallagher “and many others from both sides of the aisle.”
John Holevoet, government affairs director for the regional Edge Dairy Farmer Cooperative and state Dairy Business Association, says most of the 800-or-so members of the Edge cooperative — largely located in Wisconsin — will see some benefit from the tax plan.
“Producers will see lower tax rates overall, or a lower tax bill,” he said.
The tax overhaul comes at a time when commodity prices are low, he said, so even modest amounts of tax benefit will be welcome news.
Matt Cordio, founder and president of Milwaukee’s Skills Pipeline and lead organizer of Wisconsin Startup Week, says the tax bill is a win for entrepreneurs.
“Overall, this is a positive outcome,” he said. “There’s nothing that negatively impacts startups and tech companies in this reform.”
The corporate tax rate dropping, he said, would be “a positive benefit for any startup that is organized as a C-corp.”
“I don’t think it will radically change anything, but I think overall, generally the outcome for startups and tech companies is that taxes go down,” he said.
–By Alex Moe