Paulsen Diversion and Disinformation Campaign and a little secret about Diversified Plastics

Shhh … Erik Paulsen doesn’t want you to know this little secret — when things are put out on the World Wide Web, they stay there for voters to read them … forever !

Case in point.
Representative Erik Paulsen had published on Medium.com [Highlights below]

A Tax Reform Success Story in Brooklyn Park

I had the opportunity last week to visit Diversified Plastics, Inc. in Brooklyn Park, a sophisticated manufacturer of high-quality, custom plastic injection molded components and assemblies used for a host of other products. Diversified employs about 80 Minnesotans total, about 65 of them full-time.

It’s the kind of firm in the Twin Cities area that’s providing good-paying, quality manufacturing jobs for a wide variety of skilled workers. I had visited Diversified about a year ago, as Congress was debating the tax reform law. What I learned when I returned recently is that like many Minnesota job creators, it’s a tax reform success story.

Because of tax reform, Diversified told me the values of their ESOP plans were up between 8 and 10 percent, on average from $2,000 to $5,000, already. This is money that families of Diversified’s employees can immediately begin to stash away in a nest egg for the future.

They’re also expanding their facility, investing in a whole new “clean” wing of their building with new equipment to accommodate highly-specialized clients.

Of course, they’ve had to hire more workers to keep pace, and they’ve added 7 employees this year.

OK … there is a lot to review … and a quick Google search revealed a few stories about Diversified Plastics.

Yes, in October 2017. Congressman Paulsen did visit when Diversified Plastics had over 75 employees

[Note : The clip includes Congressman Paulsen deflecting complaints for not holding town halls (sound familiar?)]

The comment “They’re also expanding their facility, investing in a whole new “clean” wing of their building” … is interesting since they had already announced on February 5, 2018 that the project was complete

To meet growing demand, Diversified Plastics, Inc. has enlarged its molding and packaging, environmentally controlled, room by 2,775 square feet (257.81 square meters). The company has also installed a new 250-ton molding machine that accommodates existing molds and increases capacity and flexibility in scheduling. In addition to this controlled environment, Diversified Plastics has two clean rooms and an environmentally controlled assembly room.

Since the President signed the Paulsen Tax Reform legislation on December 22, 2017, it’s seems like this action was planned and authorized long before the tax bill was enacted.

Actually, Diversified Plastics, Inc. has been growing and investing in its business for years.

Minneapolis, MN — July 31, 2012
Diversified Plastics, Inc. has announced plans to expand its manufacturing location in Brooklyn Park, Minn. The additional 10,000 square feet will bring their total facility size to approximately 53,000 square feet.

Minneapolis, Minn. — September 23, 2016
Custom injection molder Diversified Plastics Inc. added a new medical quality lab and tripled its class 100,000 clean room space to boost its product assembly and packaging capabilities.

The company converted space within its 53,000-square-foot building to triple its clean room space to nearly 1,000 square feet.

Oh, yeah one other tidbit in that September 23, 2016 press release

“Currently, our sales growth is 28 percent above last year. This high growth rate is expected to continue due to the increased clean room space,” said Lund.

The company’s facility is in a suburb of Minneapolis. It has 85 employees, adding 35 employees in the last year and half.

There is also a February 2, 2018 story in the Strib

Diversified Plastics of Brooklyn Park has grown to 80 employees. It became a profitable company with revenue that should top $15 million this year.

Hmmm … so there was more job creation years before the Paulsen tax cut then after.
The employment level seems relatively stable in the 80ish range … thus, ya gotta wonder if Paulsen-suggested new employees were really new or just replacements for others who have left.

Regarding the benefits of the Paulsen Tax Cut on an employee stock ownership plans (ESOP), that depends upon their tax status … “C-Class” or “S-Class”.
Under previous tax law, C corps were subject to a graduated tax structure with a top tax rate of 35 percent.
Under the new tax law, C corps are subject to a flat 21 percent rate, effective January 1, 2018.
S-corps do not pay taxes at the corporate level.
[NOTE : an ESOP is a particular form of a retirement plan as defined by the IRS. Hence, Congressman Paulsen’s comment — “stash away in a nest egg for the future” — is true. The employee will spend these monies years in the future.]

Unless Congressman Paulsen reviewed Diversified Plastics’ tax returns, how can he know what rate they paid ? With other tax credits and business expense write-offs, a company may have not been at the 35% rate.

Sorta makes you question how much the Paulsen Tax Reform really has impacted the business and jobs … or is it just a good company operating in a good market.

Actually, let’s recognize what the message that Paulsen re-election campaign is really peddling … diversion.
Congressman Paulsen is using Diversified Plastics so that voters think this is who is benefiting from the Paulsen Tax Cuts.
While Diversified Plastics may benefit from the tax law changes, are they getting a fair share of the pie … or is someone else benefiting more ?

Using Congressman Paulsen’s numbers, 80 employees and $5,000 ESOP benefit increase, a #MathGuy can easily calculate the impact … $400,000.

$400,000 sounds like a lot … but then let us remember that Congressman Paulsen re-election campaign is being funded by Sheldon Adelson who reportedly is benefiting $660 million from the tax cut.

Yep, diversion and disinformation.

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