SWEET: Will businesses use tax breaks to create jobs?
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WASHINGTON — Owners of a distillery in Evanston and an engine parts manufacturer in Hanover Park say they will use the proceeds of a looming federal tax break to expand and hire more workers.
The massive, complex Republican tax code rewrite is on track to be passed and signed into law as early as this week. For individuals — especially in high-tax Illinois — a shave in the rates might not make up for what is lost in putting a $10,000 cap on what can be deducted for state and property taxes.
Tucked into the measure is a provision to trim federal excise taxes on distilled spirits through 2019.
That would deliver a big boost for Chicago’s burgeoning distilling industry of more than a dozen firms, and a nice shot for the parent company of Jim Beam, headquartered in the Merchandise Mart.
“It helps the smaller distillers more because every dollar that we have is a dollar that we can invest in our business,” Paul Hletko, the founder of FEW Spirits in Evanston told the Chicago Sun-Times.
BeamSuntory has more than 500 employees in Chicago.
Clarkson Hine, the BeamSuntory senior vice president for Corporate Communications and Public Affairs said, “More than half the price of a typical bottle of spirits goes to taxes and fees, so the modest excise tax reduction is an important step in the right direction and will help support re-investments in our business like capacity expansion.”
Mike Bertsche, the president and CEO of Camcraft, based in Hanover Park with other facilities in the northern suburbs, has been featured in ads touting the GOP tax plans sponsored by the Business Roundtable — a group of CEOs of major firms.
“My interest as the owner of a U.S. manufacturing company is seeing the U.S. economy grow faster. I know it is good for companies like ours and I know it is good for our employees,” Bertsche said.
House GOP members are poised to approve the final tax deal negotiated with the Senate on Tuesday. Prospects for Senate passage were bolstered when a potential holdout, Sen. Susan Collins, R-Maine, declared her support on Monday.
No Democrats are expected to vote for the legislation.
That’s because the GOP deal will increase the deficit. It means less money available for programs that benefit the middle class. Repealing the Obamacare mandate may spur increases in health insurance costs.
The biggest tax cuts over the next few years will go to the highest earners and companies in the U.S.
Business is the biggest winner in this tax bill, with big drops in the taxes business will pay.
Hletko, an attorney, opened FEW in 2011. The “grain to glass” distiller has 16 people on the payroll and makes bourbon, whiskey and gin.
The tax cut could be worth “hundreds of thousands” of dollars to the business, he said.
“We would certainly intend to invest every dollar of it,” Hletko said.
“For us, specifically, it probably means an expansion — additional equipment. It’s going to mean additional people . . . more grain purchased from American farmers. It will be more tanks purchased from American manufacturers. More truck drivers moving our product back and forth.”
Business has been good at FEW. The tax break “will allow us to really accelerate that growth across the board,” Hletko said.
Camcraft, with facilities in Roselle and Bartlett, has also been thriving. The family-owned Camcraft employs about 300 people. Bertsche said that this year he added 50 employees and invested $8 million in the business. He’s running day and night shifts.
Bertsche explained what the extra cash available to him, because of the tax savings, could mean for his company. He said he would buy more machines and hire more skilled workers to run them.
The GOP argument is that a rising economy — spurred by tax breaks to business — lifts all our ships.
Said Bertsche: “If I spend a million bucks, we generally get between a million and a million-and-a-half dollars in additional sales. . . . For us, that’s five more employees.”