CEO says RedPrairie rant could be positive

John Torinus, a corporate CEO and board member of Wisconsin Manufacturers and Commerce, reflects on Wisconsin's business climate in the wake of complaints from RedPrairie CEO John Jazwiec. From Torinus' thoughtful Journal Sentinel column:

Jazwiec has gone public with his thoughts, and that's not an easy thing to do. He will not get universal accolades for his comments.

That happened in the mid-1980s when Darwin Smith made a similar case as chief executive of Kimberly-Clark Corp. He decried the state's business climate, funded a study to plumb the depths of the divide between Madison and business leaders, and threatened to move.

Attitudes toward business have improved immensely since then. His salvo was a huge gift to the state.

And taxes have generally moved down in the ensuing two decades. After moving to a flat 7.9% in 1981, the corporate income tax has pretty much stayed there. A surtax in the early 1980s was removed after a short time. Returns were simplified by being federalized in 1987.

The top personal income tax was 11.4% in 1978, dropped to 10% in 1979, to 6.77% in 1986 and to its present 6.75% in 2000. Indexing of brackets was reinstated in 1999.

Other reductions have included lowering the inheritance tax in the 1980s to stem the outflow of retirees, the removal of production computers from the property tax in the 1990s and the recent conversion to a single sales factor for corporate taxes, a move that benefits companies with lots of jobs in Wisconsin.

This pattern can be considered a legacy of the Smith controversy.

In the end, Smith moved only his headquarters to Texas and left more than 6,000 jobs here. His corporate shift had more to do with his brilliant decision to turn Kimberly-Clark from a paper manufacturer to a consumer products company than it did with the state's hostility toward business.

We need to turn Jazwiec's candor into a positive as well.

Whether and how to cut taxes requires the kind of debate that Jazwiec may have kicked off.

And it is plain truth that any reductions must be preceded by an elimination of the state's structural deficit. Until the political leaders deal with that unmet reality, tax cuts will be hard to come by.

Emphasis mine, of course.