In The News
IWF unclogs SC Johnson as serial tax avoider
By Dominique Paul Noth
Editor, Milwaukee Labor Press
Posted August 11, 2011
In its second informative “Who Does Not Pay Taxes?” newsletter, the Institute for Wisconsin’s Future strolls through Wisconsin’s wealthiest clan, the SC Johnson family, inheritors of the Johnson name, Racine company and a fortune that makes each of the four richest members worth $2 billion each, according to Forbes.
Since it’s a private company, no outside data reveals how much in profits SC Johnson really makes, but the odds are good they aren’t producing the likes of Windex, Ziploc, Off, Pledge, Raid, Drano and Saran Wrap just for their health or to pass the time.
Yet, IWF reveals in its newsletter, SC Johnson didn’t pay a penny in Wisconsin income tax for 2000 to 2008 (the last years for which corporate income tax data is available).
It is a curious revelation for a company that regular appears on lists of best places to work and “most ethical companies.” Even more interesting is how good at tax avoidance are other Racine area firms the same family controls, many of whose extensive profits can be revealed.
Diversey’s pre-tax profits during 2000-2009 totaled $360 million. The company is currently being sold for $4.3 billion. Its state income tax for those years is zero.
Johnson Outdoor’s pre-tax profits in 2000-2008 (latest data) totaled $42 million. State income tax: also zero.
But fear not, according to the IWF research revelations. There is one tax-paying family owned member. It is Johnson Bank, whose pretax profits during 2000-2009 of $219 million yielded a total state income tax of $3 million. Now that’s an effective tax rate of 1.4% while the actual state tax rate is 7.9%, so even Johnson Ban k seems wrapped in economic Saran Wrap.
This is one of the highlights of the new IWF newsletter, which can be downloaded from milwaukeelabor.org’s Take Action section. It also explores how SC Johnson’s tax avoidance policy has landed it in court.
At issue, in state court in Racine and federal court in Chicago, is the company’s treatment of a whistle-blowing former tax manager, Michael Beguile, a 12-year veteran in
SC Johnson’s tax office who was fired after telling federal agencies he’d witnessed illegal tax practices.
Why, the IWF’s research director Jack Norman asks, should the rest of Wisconsin pay taxes for billionaires – and how do these Johnson companies pull in such profits without
having to pay a penny in Wisconsin on taxable income? The newsletter -- and its tax data, which the Milwaukee Labor Press is a partner in releasing and publicizing -- wants the state legislature to act to stop such loophole abuse by so many highly compensated and profitable Wisconsin companies that are skating unharmed through Wisconsin’s questionable tax practices.