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The JS Cheap Shots Conservative Woman

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OK, that's not exactly news. But Sunday's cheap shot against Janesville's Diane Hendricks was notable on two levels: (1) it was completely gratuitous, (2) it recycled a misleading talking point of the left without any context.

The shot appears in a heavy-breathing and detailed analysis of Governor Walker's speech at the Reagan Library -- the article dealt almost exclusively with his plans for the next state budget and its possible implications for Walker's political future.

But then the story shoe-horns in this nugget:

"Walker was accompanied by Diane Hendricks, owner of ABC Supply and a major GOP fundraiser. The Beloit billionaire paid nothing in state income taxes for 2010, the Journal Sentinel has reported."

Milwaukee County executive Chris Abele has also been known to pay no state income tax, (for four years), despite being a millionaire,  a fact duly reported by the JS. But the paper no longer feels it necessary to mention the fact every time he is mentioned.

But for Hendricks, the tax story has become her Scarlett Letter.

Except that the whole charge rests on a bogus assumption. The reality is that Hendricks paid a huge amount of state taxes through her company, a fact well-known and documented.

The JS first reported on the tax charge back in May, when the left/media was flogging the story of the video where Walker was caught-on-tape using the phrase "divide and conquer" in a conversation with Hendricks.

Back then, however, the paper provided some useful context:  Hendricks had paid millions a dollars in state income taxes in the years prior to 2010. In fact, in 2009,  her tax bill was a whopping $2.26 million, but dropped to zero the next year.

Why? What happened?

As it turns out, the explanation was quite straight forward if somewhat complicated. The company Hendricks owned had changed its corporate structure, which changed the way taxes were reported and paid. 

Scott Bianchini, ABC's  tax director, explained that "before 2010, ABC Supply was an "S" corporation, meaning the profits and the tax obligation flowed to Hendricks as the owner of the firm. In 2010, the company changed its structure so the profits and the tax obligation stay with the company."

"Now ABC is paying taxes on its own," Bianchini said....

"In addition, Bianchini provided records showing that the company paid Wisconsin income taxes of more than $1 million last year and said that Hendricks' 2011 income tax liability is "substantial."  through her business.

In other words, Diane Hendricks not only did pay state taxes, she paid a ton of them.

None of that context was provided in Sunday's story --perhaps because it didn't fit the Diane Hendricks-is-a-greedy-tax-avoiding-billionaire narrative.

**

The Hendricks-paid-no taxes meme was pushed hard earlier this year by a variety of left leaning groups, who shopped the story that she had paid no corporate taxes despite being worth more than $2 billion. The charge was flogged by the Institute for Wisconsin's Future which falsely charged that “ABC Supply paid exactly $0.00 in state corporate income tax in 2005, 2006, 2007 and 2008, according to the state Department of Revenue.”

But the institute got it wrong.

However, Scott Bianchini, tax director with Beloit-based ABC Supply, said the Institute for Wisconsin’s Future jumped to a conclusion without thoroughly checking the facts.

He said during the years in question, ABC Supply Company was an S corporation. According to the Internal Revenue Service website, S corporations are organized to pass corporate income, losses, deductions and credit through to shareholders. Those shareholders for S corporations report the flow-through of income and losses on their personal tax returns and are assessed tax at their individual income tax rates.

In the case of ABC Supply, Bianchini said, the company’s founders and owners — the late Ken Hendricks and his wife, Diane Hendricks — paid the income taxes through their individual personal income taxes.

“The fact is, ABC reported substantial taxable profits on their Wisconsin corporate income tax returns in the years 2005-2008 and substantial Wisconsin taxes were paid on these profits,” Bianchini said in an email to the Beloit Daily News.

The charge was also picked up by lieutenant governor candidate Mahlon Mitchell who said:  “Well, I think you got to look at people like Diane Hendricks, who’s one of Scott Walker’s buddy billionaires, who paid no corporate tax last year and is worth over $2.8 billion."

In response, Hendrick's company issued a statement pointing out that:

" ABC Supply has paid $1,078,000 in estimated corporate income taxes to Wisconsin for 2011. ABC operates nationwide and pays income taxes to many other states where ABC has a larger business presence such as California, Texas, Florida, New York, and Illinois. ABC has paid many millions of dollars in corporate income taxes to these states and others as well as federal corporate income taxes.

No apologies were forthcoming.

 

 

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