One Voice Member Ralph Hardt Testifies on Manufacturing and Tax Reform at Congressional Hearing

We are proud that our colleague Ralph Hardt, President of Jagemann Stamping Company in Manitowoc, Wisconsin, was asked to represent small and medium-sized manufacturers at an important Congressional hearing on tax reform last week.  At a hearing of the House Committee on Ways and Means on “Tax Reform and the U.S. Manufacturing Sector," Ralph called on Congress to keep in mind the impact on small U.S. manufacturing businesses when undertaking tax reform, particularly concerning “S-Corps” and similarly structured companies.  Ralph is a member of NTMA and PMA.

Ralph told the Committee: “More than 70 percent of manufacturers are structured as S-Corporations or other pass-throughs paying taxes at the individual rate.  There is a lot of noise in Washington right now about only raising taxes on the ‘wealthy’ to pay for social programs and hopefully balance our federal budget. However, as a small business, we may report $250,000 or more in profit, but few manufacturers take those profits home – they are overwhelmingly reinvested in the business and our employees manufacturing in America. The less resources we have due to paying more taxes ties our hands and does not allow us to buy new million-dollar machines that need new employees to run.”

Ralph also emphasized the distinction between the perception of ‘wealthy’ taxpayers and the realities of small business owners: “What many policymakers in Washington do not understand is, unlike larger corporations, small manufacturers like us are required to provide a personal guarantee for most loans when purchasing capital equipment or expanding our facilities. I just recently signed a personal guarantee for [a] new $270,000 grinder. This means as a small business owner, I have to put my family’s home on the line, and take significant risks if I want to grow my business and compete globally.”

Changing banking terms have created additional burdens for small business owners, Ralph testified: “Banking and other lending requirements have toughened, forcing most owners to leave retained earnings in the business for the sole purpose of meeting collateral requirements. Profits left in the business are still subject to taxation even before distribution to the owner, creating a system which penalizes and taxes business owners who leave money in the business for reinvestment, resulting in reduced ability to secure loans. Therefore, increased tax liability means less money in the business,  restricting its ability to access timely and sufficient credit to purchase machines, expand facilities and hire new employees.”

Ralph called on Congress to work to speedily resolve potential changes to the tax code for the good of U.S. businesses: “How our businesses are organized and the way we pay taxes has the single greatest impact on our companies and how much we reinvest in the business … The uncertainty in the tax code and over what the future holds keeps many manufacturers from investing as much as they should or could to grow their businesses.”

Read the full version of Ralph’s testimony at http://www.metalworkingadvocate.org/pdf/Hardt-Testimony.pdf.