In May, Rep. Mike Fitzpatrick (R-Pa.), along with scores of other lawmakers engaged in similar activity, submitted 12 bills to suspend importation duties on chemicals such as Isoviolanthrone Crude Dry Presscake and 4-Sulfo-1,8-naphthalic anhydride potassium salt. The proposals would reduce taxes companies pay when they import chemicals from overseas to produce products here in the United States.
Now the International Trade Commission has estimated how much those proposals would cost taxpayers in lost revenue, which is also the monetary amount they would benefit the companies that are requesting them.
Eleven of Fitzpatrick’s 12 proposals would benefit two companies — both significant campaign donors — to the tune of $5.2 million, the ITC documents show.
The ITC analysis connected three of the proposals to Arkema Inc., the U.S. division of Arkema, France’s largest chemical company. Documents submitted by Fitzpatrick in May did not list the company’s name in connection with the proposals.
Those three bills would benefit Arkema by $3.8 million in reduced taxes over five years.
Arkema’s political action committee and people connected to the company have donated at least $15,870 to Fitzpatrick since 2010, according to documents filed with the Federal Election Commission by Fitzpatrick’s campaign.
Arkema’s U.S. headquarters is in King of Prussia, Pa. The company employes 2,400 people in the United States and 14,000 people worldwide. A representative for Arkema said the proposals had bipartisan support.
That bipartisan support was also noted by Fitzpatrick spokesman Athan Koutsiouroumbas, who said the proposals were backed by Pennsylvania Sen. Bob Casey, a Democrat.
“Protecting local jobs is the only motivation behind introducing these bills and they were done in a bipartisan manner,” Koutsiouroumbas said, adding that the forms filed by Fitzpatrick that obscured Arkema’s role were “preliminary.”
Eight of Fitzpatrick’s other proposals would benefit United Color Manufacturing, a Newtown, Pa., company and Fitzpatrick campaign donor.
Those proposals would reduce United Color Manufacturing’s taxes by $1.2 million over five years, the ITC said.
In May, Thomas Nowakowski, the president of the company, said the duty suspensions are critical for his company to stay competitive with rivals in India, China and Mexico.
Nowakowski estimated the monetary value of the bills as a “low six figure” sum, considerably smaller than what the ITC actually estimated it as.
Nowakowski and his family have also been generous campaign donors to Fitzpatrick and the Republican Party, giving the Pennsylvania Republican more than $26,000 since 2002 and contributing more than $150,000 to Republican candidates and party organizations during that time.
On March 30, about one month before Fitzpatrick introduced the eight bills, Nowakowski, his wife, Carmella, and his son Thomas Jr. donated $5,500 to Fitzpatrick.
Despite the timing, the campaign donations are not evidence of impropriety or quid pro quo. Fitzpatrick’s office and Nowakowski said the donations were not related to Fitzpatrick’s introduction of the eight bills.
United Color Manufacturing, which employs about 40 people at two Pennsylvania locations, imports various chemicals to produce dyes and pigments that are then used by downstream manufacturers.
“A lot of our competition comes from China, comes from India, comes from Mexico. And basically, the rules and regulations are less over there. The wages are less over there,” Nowakowski said in May.
For many of the chemicals the company imports, there is a 6 percent to 7 percent duty, which Fitzpatrick’s bills would temporarily suspend. “It makes us more competitive globally against cheaper competition, which I would think everyone would want,” Nowakowski added.
Koutsiouroumbas said the cost in lost revenue is worth it to protect the jobs created by United Color Manufacturing.
“Considering the misguided stimulus cost taxpayers $278,000 per job created, … $12,500 per job to keep over 40 people working at a single small business in our district and potentially across the country via this process is a prudent and efficient way for Congressman Fitzpatrick to help keep people working,” he said.