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Trek Bicycle: Officials weigh in on company’s tax record

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MADISON (WITI) -- A FOX6 News report that examined Mary Burke's campaign for governor and her association with Trek Bicycle Corporation is getting national attention. FOX6's Mike Lowe looked at Trek's record on taxes -- and now, the company is responding.

Democratic candidate for governor Mary Burke is a former Trek Bicycle executive. She uses the Trek logo in her campaign ads, and touts her experience with the company during virtually every public appearance.

But one aspect of the company she isn't talking about is Trek's tax history.

Records from the Wisconsin Department of Revenue obtained by FOX6 show that Trek Bicycle hasn't paid net income taxes since 1982.

Burke declined FOX6's repeated requests for an interview on this topic, but now, Trek Bicycle is speaking out.

"If you look at the same sheet from a lot of companies in the state of Wisconsin, you'll see the same thing," Trek Bicycle spokesman Eric Bjorling said.

Bjorling says Trek, like thousands of other companies in Wisconsin pays taxes under Subchapter S of the IRS code -- which allows shareholders of a company to file as individuals and pay at a lower rate.

"Subchapter S means that your shareholders pay your corporate tax based on their share of Trek's income. Trek is a privately held company, so Subchapter S is a pretty common designation," Bjorling said.

Indeed, the head of Wisconsin's largest business group says the S-corp designation is essentially the standard in Wisconsin.

"90 percent of Wisconsin businesses pay taxes at the individual rate, so just looking at the corporate rate is a misnomer, because again most businesses are paying at the individual rate," Kurt Bauer, the president and CEO of Wisconsin Manufacturers & Commerce said.

FOX6's story also pointed out that Mary Burke has criticized Gov. Scott Walker's pro-business policies.

But when she was Wisconsin's Secretary of Commerce, she put together a package of incentives that totaled in the millions to get Uline to come from Waukegan, Illinois to Pleasant Prairie -- and Trek itself received an $875,000 loan from the state in 1995 to build a new facility.

"In the end, $392,300 of that loan was forgiven, and Trek paid the remainder of the loan in accordance with the terms," Bjorling said.

So the natural question a viewer would raise is this: Is Trek Bicycle a good corporate citizen?

"My answer to that is: absolutely," Bjorling said.

Bjorling points out that Trek has raised $11 million for the MACC Fund through the annual "Trek 100" -- a huge charity bike ride that the company has hosted for the past quarter century.

He says the company also donated $1.5 million to the city of Madison's Bike Share Program -- and that company founder Richard Burke left his entire estate to the Burke Foundation, which has awarded more than $6 million this year alone to charities across Wisconsin.

"We were founded in the state of Wisconsin by a man who believed to whom much is given, much is required and we still act under that principle everyday here," Bjorling said.

The Wisconsin Republican Party and the National Republican Governors Association have both criticized the Burke campaign and the Democratic Party in the wake of FOX6's report.

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