Business is good, but owners of firms say a tax cut could make it better

(c) 2017, The Washington Post.

LEBANON, Pa. – Douglass Henry, owner of packaging materials manufacturer Henry Molded Products, admits he could live without a tax cut. He’s not going to shutter his factory and lay off his 105 workers here in Amish Dutch country if Congress fails on tax reform. His company is flourishing, the workers and machines humming 24 hours a day.

“We’ve been selling everything but the paint on the wall,” Henry said.

But Henry, a longtime Republican, says he wants Congress to pass a big tax cut for a different reason: It can.

“Now is the opportunity,” said Henry, 60. “This is not an issue that is going to come up with every Congress. After 30 years, we’re overdue.”

Henry stands at the conflicted heart of the GOP’s push for a $1.5 trillion tax overhaul, which is now moving forward in the Senate after the House passed its version of the tax bill Thursday with hopes of a year-end signing by President Donald Trump.

Republican lawmakers argue that U.S. companies need encouragement to spend more and generate additional economic growth. But business has been good across America, where corporate profits sit near record highs and unemployment near record lows. And although GOP lawmakers say they are focused on delivering benefits to the middle-class, Congress’s official scorekeeper says the bulk of the benefits of the proposed legislation flow to the wealthy and corporations.

The bill features “a very top-heavy distribution,” said Edward Kleinbard, a former chief of staff for Congress’ nonpartisan Joint Committee on Taxation and now a law professor at the University of Southern California. The markets “are awash in capital today, and there’s not a sign of needing more investment.”

But for the GOP, the success of the effort to overhaul the tax code has become nearly synonymous with the question of whether Republicans can accomplish anything substantial during a rare moment of unified control of the federal government. The party is acutely aware that failure to deliver would upset the business interests that have long forged a key part of the Republican base.

Donors’ message has been, “Get it done, or don’t ever call me again,” Rep. Chris Collins, R-N.Y., said last month.

Henry has donated $10,450 to political causes in the past two years, mostly to the political action committee of the National Federation of Independent Business, which in turn spends the vast majority of its funds to help Republicans, according to data analyzed by the Center for Responsive Politics.

In April, Henry joined Trump and others for a tour of a wheelbarrow factory in Harrisburg, part of an executive signing ceremony on trade issues. A few months later, Henry traveled to the White House for an event highlighting small business owners. Last month, he was invited to return to Harrisburg for a speech by Trump stumping for tax cuts.

“There is pent-up demand for our goods and services. And we’ll meet it,” Henry said, “assuming our friends down there in D.C. cooperate and make this go through.”

Whether Republicans succeed in their tax effort could be revealed as soon as next month, as lawmakers try to meet Trump’s demand that they send a tax overhaul bill to his desk before year’s end.

The House bill passed by a comfortable margin last week, but Senate GOP leaders still don’t have the 50 votes needed to pass legislation, with several Republican moderates and even one conservative senator voicing concerns last week.

Congressional Republicans have said this is their biggest policy priority, especially at a time when the GOP remains divided over many other issues.

“There’s enormous desire within the entire center-right coalition to pass a pro-growth tax reform bill,” said Whit Ayres, a veteran Republican pollster.

Critics of the tax overhaul say it won’t accomplish what Republicans say it will. Analyses by the Joint Tax Committee and independent nonpartisan groups such as the Tax Policy Center show that working-class and middle-class Americans will receive modest benefits, while the wealthy will benefit from large cuts in a variety of taxes. And the Senate bill goes so far as making the corporate tax cuts permanent but the individual tax reductions temporary.

The deep divide over the tax plan can be seen in Henry’s home state. Pennsylvania’s Republican senator, Patrick Toomey, described the cuts last week as the “most pro-growth business reforms in over 30 years,” harking back to the last major overhaul plan, signed by Ronald Reagan in 1986. Henry calls Toomey a “good friend.”

But Pennsylvania’s other senator, Democrat Robert Casey, has charged that the tax bill is a “a giveaway to the super-rich and big corporations at the expense of some, even many, middle-class families.”

To Henry, who lives in a deeply conservative part of the state, there should be no doubt that a tax cut would help him – and the economy. Henry’s factory is about a mile from Lebanon’s historic downtown, just past a “help wanted” sign at a KFC and a “welder needed” sign outside a state office.

He describes his company as a boutique paper mill that takes bales of waste newspaper and cardboard – even candy wrappers from the nearby Hershey plant – and makes “engineered papier-mâché” that can be pressed into almost any shape.

His father started out making biodegradable containers for florists and horticulturists, like the disposable flower containers you might see left behind at cemeteries. Now Henry makes specialized containers for shipping wine bottles, medicine vials, sump pumps and automobile wheels, among other products.

Lebanon County’s economy is bustling, with an unemployment rate of 3.7 percent, well below the national average. But Henry says he’s confident businesses like his can contribute even more to the economy.

“I’ve just been waiting to get called in,” he said, comparing his situation to sitting on the sidelines during a big football game.

His company generates more than $10 million a year in revenue, Henry says, and he both gets a salary and draws profits from the company.

Taxes on both would likely fall significantly in any tax overhaul.

“Maybe I can keep a few more shekels in my back pocket, but the vast majority gets reinvested in this company,” Henry said.

Still, he is hard-pressed to say exactly what he would do with a tax windfall.

He could be quicker to offer new products and go after new customers. And the tax cut could benefit many of the large manufacturers who buy his packaging, so demand for Henry’s product could soar.

But growth is nothing new for Henry Molded Products. He added a new production line to his factory just six weeks ago – and finished another about four years ago. Each new line means 10 new workers. Wages range from $13 an hour to about $24 an hour, he said.

Times are good, Henry said, but they can always be better.

“We’re not going to roll over and go home,” he said.


Go to Source