Kimberly-Clark Wants Wisconsin’s Commitment on Tax Incentives

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By Michael J. Bologna

Wisconsin Gov. Scott Walker (R) launched an eleventh-hour campaign to save an aging paper plant, begging senators for a special legislative session to enact more than $100 million in tax incentives for Kimberly-Clark Corp.

Walker sent a letter to senators Sept. 14 requesting passage of A.B. 963, which would provide a package of tax benefits to Kimberly-Clark’s Cold Spring plant in Fox Crossing, Wis. and preserve 500 jobs. The bill passed the Assembly in February, but the Senate adjourned in May without taking action. Some type of extraordinary meeting of the Legislature would be required for the Senate to act on A.B. 963.

Walker warned senators that Kimberly-Clark needs a commitment from the state “by September 30, 2018, so it can finalize its plans in Wisconsin and provide certainty to employees.”

“Hundreds of good-paying, family-supporting jobs are at stake. Besides the workers at the plant, there are workers at nearly 200 suppliers across the state that will feel the impact of this decision,” Walker said.

While the Wisconsin Economic Development Corporation (WEDC) currently awards job retention credits of up to 7 percent of the taxpayer’s payroll, the bill would provide Kimberly-Clark with credits of up to 17 percent for wages and 15 percent for plant upgrades, Walker said. The arrangement mirrors the tax credit package awarded last year to Foxconn Technology Group, which is constructing a $10 billion technology campus in southeastern Wisconsin.

$115 Million Cost

The tax benefits under A.B. 963 have been estimated by the WEDC to cost the state $115 million over 15 years. Walker said that Kimberly-Clark must retain at least 93 percent of its full-time employees to gain these benefits. He alsosaid that the legislation includes “claw back provisions” to protect taxpayers if the company reneges on its commitments.

A spokesperson for Kimberly-Clark didn’t respond to a request for comment. Walker, however, has said the company will be forced to shutter operations if the Legislature fails to act.

Disruption in Wisconsin’s once-thriving paper industry emerged in January when Kimberly-Clark announced a global restructuring plan that would result in more than 5,000 job losses, approximately 12 percent of its global workforce. The company specified the closures of the Cold Spring plant and its smaller Neenah Nonwovens plant.

The Walker administration and lawmakers responded with tax proposals designed to save the plants. The union representing the bulk of Kimberly-Clark’s production workers in Wisconsin, USW Local 2-482, separately approved a package of concessions designed to preserve operations. The company has responded positively to both developments, but said the tax benefits and concessions likely wouldn’t affect its decision to close the Neenah Nonwovens plant.

It was unclear whether the Republican-controlled Senate would respond to Walker’s plea. At least two Senate Republicans have said they wouldn’t support A.B. 963, suggesting the need for bipartisan support.

A.B. 963 has been unpopular with several left-leaning advocacy groups, which have criticized the bill as a “giveaway” and an exercise in “corporate welfare.” One Wisconsin Now recently said that Kimberly-Clark is pressuring the state for tax incentives, even though it pays virtually no income taxes to Wisconsin.

“Kimberly-Clark has had $1 in Wisconsin state net tax burden the last four years available. Now Gov. Walker is calling for the passage of a giveaway that equates to over $166,666 per job,” Scot Ross, executive director of One Wisconsin Now, said in a Sept. 14 statement.

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