Bruce Murphy
Back in the News

Diane Hendricks, Savior of Beloit?

New York Times glowing story on billionaire doesn’t mention her tax breaks.

By - Aug 7th, 2017 01:48 pm

On Sunday the New York Times wrote a powerful and quite glowing story about billionaire Diane Hendricks’ mission to remake the troubled town of Beloit. Money couldn’t buy publicity like this.

“When Diane Hendricks sees something she doesn’t like here, she buys it,” reporter Alexandra Stevenson writes.

“A bankrupt country club. A half-empty mall. Abandoned buildings. The rusting foundry down by the river… Hendricks thinks (Beloit) can be a place where start-ups create the next billion-dollar idea, and she is remaking the town to fit her vision. She can do so because she is the second-richest self-made woman in the United States, behind only Marian Ilitch of Little Caesars Pizza, according to Forbes magazine. “

It’s an interesting if selective story, with all good news about Hendricks and her impact on Beloit, where her company ABC Supply, the nation’s largest wholesale distributor of roofing, windows, siding and gutter materials, is located. It might have been located in Janesville, the story notes, but Hendricks and her late husband, Ken, were turned down for a loan there when first getting started: “We don’t do business with entrepreneurs, and we don’t want your business,” Hendricks recalled the banker saying. As a result, the two “turned their backs on Janesville, focusing instead on Beloit,” Stevenson reports.

Among other efforts by Hendricks the story notes, “she took the library from its historic location downtown and resurrected it inside a failing mall at the edge of town, replacing the original with a performing arts center where dance and music students from Beloit College can study and perform each year. Then she scooped up nearly every building on a downtown block and knocked each one down, making way for a sushi restaurant, a high-quality burger joint and modern apartments…”

Hendricks and her husband also bought Ironworks, an old foundry complex which she has converted into a commercial space and has “wooed several start-ups, persuading them to set up shop” there. That includes Comply365, “which makes software used by airline pilots to complete their flight paperwork,” and now counts Southwest Airlines among its biggest clients.”

Hendricks also worked with city officials in Beloit to help attract the Rockton, Illinois online coupon company FatWallet across the border to Wisconsin: it has relocated its headquarters in the Ironworks complex.

And she and her husband agreed to help bankroll an international film festival in Beloit, which has become a success, even though its debut (in 2006) “occurred the same week as the much more famous Sundance Film Festival.”

Yet Beloit, a classic Rustbelt town impacted by the decline of manufacturing, remains “deeply troubled” despite Hendricks’s efforts, the story notes, with high unemployment and boarded-up shops. “About a quarter of the population lives in poverty, twice the rate of residents in the rest of Rock County. One in every four children lives in poverty in the county.”

Which raises the question of whether Hendrick’s vision for America is one that leads to economic success for average Americans. Stevenson doesn’t report that Hendricks urged Gov. Scott Walker to go after private sector unions, or that the Right to Work law he signed has been found to lower average wages in states where it has been passed. Stevenson doesn’t tell us how many employees at ABC Supply have family-supporting jobs.

Nor does Stevenson report that Hendricks didn’t pay a cent in state taxes from 2012 through 2014, or that tax cuts passed by Walker and Republicans went mostly to wealthy Wisconsinites like Hendricks, or that Hendricks has grossly underpaid her property taxes going back many years.

Liberals might argue that Hendricks is a classic example of trickle-down economics, proof that tax cuts for the rich fail to produce a strong middle-class. Conservatives might argue that Hendricks is evidence that tax breaks have led to good things in Beloit. But either way, it helps to have all the facts recounted. It’s rather surprising to see the Times, celebrated for in-depth reporting, miss so much relevant information about Hendricks in its story.

Stevenson normally covers “hedge funds and the world of finance,” as her newspaper bio notes, so the story is a bit of a departure for her. How did the article originate? The reader doesn’t know.

19 thoughts on “Back in the News: Diane Hendricks, Savior of Beloit?”

  1. Vincent Hanna says:

    “How did the article originate? The reader doesn’t know.”

    I wondered the same. Maybe the writer just read Janesville: An American Story. It is a glowing story though. Where’s that liberal media bias?

  2. Jason Troll says:

    Thank you Bruce, please do not forget the top 5 Billionaires in the country who all happened to be protected by Democrats. Bill Gates, Warren Buffet, Jeff Bezos, Mark Zuckerberg and Larry Ellison. These Billionaires all call for higher income taxes yet 99 percent of their wealth is not covered by income taxes. Even the NY Times is owned by Billionaire Carlos Helu Slim. He pays no income taxes.

  3. Vincent Hanna says:

    What in the hell does that have to do with this story? Can you try not trolling for like five seconds?

  4. Jason Troll says:

    Vince, the reason Diane Hendricks pays no income taxes is …drum roll…99 percent of her wealth is not based on income. So, why must she pay income tax on zero income.

  5. Thomas says:

    Jason, you’re saying she maintains her lavish lifestyle on zero income. There’s certainly a seven-figure income there somehow. If she’s legally not income paying taxes, then the income tax code is broken. How did the get broken & how to make lawmakers fix it, is the question. If she was paying taxes before the repubs took over, I’m guessing the repubs broke it in favor of rich individuals and businesses.

  6. Tom D says:

    Jason, your comments about Carlos Slim are not just irrelevant to this topic; they are also factually wrong.

    First, the NY Times is not “owned by Carlos Slim”. He owns 17% of it—nowhere near the whole thing or even a majority. And all of his stock is “Class A”, whose shareholders only permitted to elect one-third of the NYT Board of Directors. (The remaining two-thirds of the directors are elected only by “Class B” shareholders, and Slim has no Class B shares.)

    And even the third of the Board he gets to help elect contains NO director chosen by Slim.

    In other words, Slim has no control of the NY Times whatsoever. (This is very different from Rupert Murdoch’s control over the NY Post and Wall Street Journal.)

    Second, Slim does indeed pay US income taxes, even though he is not a US citizen and does not live in the US. Non-resident aliens (like Slim) are subject to US Federal income tax on all dividends and interest earned inside the US. That tax is withheld at a flat rate when the money is paid and is not subject to adjustment (or refund) if he files a form 1040. (As a non-resident alien, he is not obligated to file a 1040.)

    Since his NY Times shares pay a dividend, we know he pays US income taxes since those taxes are withheld when the dividend is paid.

  7. So this is how it is going to be from here on out in America?

    Wait around for a billionaire to buy up a town and redevelop it.

    Sound a bit medieval to me.

  8. Tyrell track master says:

    As much as I dislike her politics, you gotta give Hendricks some credit here. Great to hear of this development and even if Beloit is still a mess, this is a massive improvement.

  9. Amy p says:

    Tom Bamberger – YES!!!

  10. Sue says:

    She doesn’t pay taxes? You mean… like one of the poors? Well that’s not right. Shouldn’t she be drug-tested or something?
    Joking aside, I stopped reading after this ridiculous paragraph:
    “Ms. Hendricks, a major Republican donor, was briefly thrust into the national spotlight a few years ago when she was recorded asking Mr. Walker to break up the labor unions. He then introduced a bill limiting the ability of public workers to bargain over wages. In response, protesters occupied the halls of the Capitol for weeks.”
    Um…that’s kind of a weird cause-and-effect way to describe the explosion that was Act 10.

  11. Jason Troll says:

    Tom D,

    Please inform me. When did receiving a dividend from a stock(NY Times) become declared part of income and then accessed the income tax. A dividend is considered a capital gain. I chuckle at the though that you think owning 17 percent of a companies stock does not make you an influencer of news.

  12. Until liveable wage jobs are created to keep people in Beloit pretty buildings are not enough . Downtown looks better . Poverty rates or high unemployment have not been reduced as was correctly stated in the NY Times article , (with the new revised properties. ) It is true she got deals from gov walker and had a lot of negative influence on the changes in Wisconsin that caused months of tens of thousands of citizens protesting and occupying the state capitol. We lost a lot .

  13. tim haering says:

    Maybe Art Sulzberger wants the Koch sister to buy his newspaper.

  14. Tom D says:

    Jason, exactly how does Carlos Slim influence the NY Times’ news content? His ONLY possible power is to replace the NYT’s auditors. (Do you really believe those auditors, Ernst & Young, influence the content of NYT new stories? If so, get professional help before ACA goes away!)

    Look at how the NY Times stock is structured and then look at how that stock exercised control at the recent Annual Shareholders’ meeting.

    First, the NYT has two classes of stock:
    • Class A—available to the public (The only stock Mr. Slim owns)
    • Class B—available only to a family-owned trust

    As of this March, 99.5% of NYT shares were Class A, and only 0.5% were Class B, but Class B shareholders hold all the power.

    Second, at this year’s annual meeting, shareholders held 5 votes showing class A shareholders are virtually powerless:
    • 9 Board seats (only Class B shareholders could vote)
    • 4 more Board seats (only Class A shareholders)
    • Executive pay (only Class B)
    • Timing of future executive pay votes (only Class B)
    • Ratification of an auditor (Classes A and B)

    (Of 13 Board members, Class A shareholders only elect 4 and have no say whatsoever over the other 9. Furthermore, none of the 4 “Class A Board members” are Mr. Slim’s designees.)

    Look at the above (remembering that Mr. Slim only holds Class A stock and is prohibited from ever holding Class B stock) and explain how he “influences” the NY Times. The only thing he has ANY chance of influencing is whether Ernst & Young continue as the NYT’s auditors.

  15. Tom D says:

    Jason, cash dividends are NOT considered capital gains. On your form 1040, dividends are reported on lines 9a and 9b, while capital gains go on line 13. Another distinction is that their tax rates differ—up to 15% for dividends and up to 20% for capital gains. (Both of these rates are much lower than top taxes on wages, an example how of the rich—who receive most dividends and capital gains—are taxed less than wage earners.)

    Jason, did you, by any chance, study tax law at Trump University?

  16. Vincent Hanna says:

    Damn. Troll got owned. Game, set, match.

  17. Kent Mueller says:

    Late to this post, but I have a couple-three things to say about Diane Hendricks. First off, I commend her efforts on behalf of Beloit, she’s done quite a bit even though it hasn’t really turned the town around. A two-tier society sure as hell doesn’t restore the American middle-class and her political leanings and actions actively work against that restoration. As Tom Bamberger said, “Sounds a bit medieval…”.
    Second, she’s one I’d count, along with her late husband Ken and John Menard, as what I label “Hillbillionaires”. If there is a God, he sent a message to Ken Hendricks to “Stay off of roofs” by giving him (along with initiative and a timely housing boom) a very successful business. As witnessed by his unfortunate demise, he didn’t get the message. Any more than John Menard did when he chose to do crappy things like a recruit a literally minor (low rank and 16 YO) employee to help him personally dispose of a very small environmental issue (asbestos in a warehouse, packed in black garbage bags tossed in the back of his old pick-up truck) on public land. These actions are proof again that, like Donald J. Trump, money can’t buy class or even simple human decency. Sad!
    Third, I think her politics are as they are only because she thinks rich people are supposed to BE conservative and she has a deep need to belong, hence, she’s a conservative of the worst sort. Still, she’ll always be a Hillbillionaire as long as her politics remain the same. Just like John Menard.

  18. Jake currently of the MKE says:

    Hendricks, like mist antiworker rightwing billionaires are authoritarians and totalitarians.
    She deserves neither respect or praise. Her policies and whom she supports reveals her character.
    Millionaires and billionaires are not to be praised, they made their money on gaming the system on the back of workers, while using their power to take down the middle class.
    Oligarchs, republicans should know whom their masters are, the politicians do, the rest of you are willing tools.

  19. Brent says:

    Ahhhhh the sweet smell of jealousy. Lol

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