The Pennsylvania primary is here. And one litmus test voters should apply to candidates before pulling the lever is the degree to which they support the small business community. Most politicians will talk the talk, but they also need to walk the walk. There are more than one million small businesses in the Keystone State — making them the backbone of the Pennsylvania economy.
As a small business owner myself that employs more than 170 people, I have a good handle on what will benefit entrepreneurs and encourage economic growth.
Number one on the priority list in Washington should be to extend the Tax Cuts and Jobs Act, which was initially passed in 2017 and is soon scheduled to expire. Leading up to the pandemic, the tax cuts fueled growth and prosperity. Individuals used financial savings to buoy family budgets and revitalize local economies. It’s estimated that Pennsylvanians making between $25,000 and $50,000 experienced a 24% federal tax cut. And those earning up to $75,000 enjoyed a 20% drop.
The legislation specifically gave a boost to the small business community.
Allowing the immediate expensing of new capital equipment is one way the legislation helps encourage business investment. Normal expenses, like wages, were already deducted from taxable revenue. But with changes included in the Tax Cuts and Jobs Act, a business owner can also immediately write-off the cost of new equipment, like machinery or tech systems. Previously, the deduction for that investment was spread out over several years, which, for budgetary reasons, discouraged the purchase.
It also helps in other ways. The 20% small business tax deduction — which more than 850,000 state small businesses claimed in 2019 — in addition to lower marginal income tax rates for pass-through entities give entrepreneurs more financial wiggle room. Taken together, these policies allow small businesses to retain more of their own money, which can then be funneled into hiring more employees, raising wages, and expanding operations.
My small business provides an informative case study about how the tax cuts concretely translate into workplace and employment benefits.
At Guy Chemical, we were able to purchase new equipment, build a new lab five times the size of the older one, raise employee wages, and created nearly 30 new jobs. And because of an increase in broader economic activity associated with the tax cuts, my business enjoyed a $9 million surge in annual sales—a financial windfall that is passed down to employees and our rural Pennsylvania community.
Without action from Congress, these provisions that act as rocket fuel for the small business community will expire over the next few years.
Beyond making these tax cuts permanent, Pennsylvania’s elected officials need to take on Washington’s spending addiction.
For two decades, both political parties have spent more than what is taken from taxpayers — a trend that has been pumped-up with steroids under the Biden administration, even though the pandemic has passed. And now the chickens are coming home to roost in the form of four-decade high inflation that is squeezing small businesses to a pulp. Price tags can only be raised so much without triggering a customer mutiny; entrepreneurs must swallow the rest.
A nationwide monthly poll from the Job Creators Network Foundation reveals small business sentiment regarding current economic conditions is the lowest it’s been since the survey began nearly a year ago. That needs to change in order to return to the pre-pandemic boom. So, when Pennsylvanians head to the polls Tuesday, these small businesses that sustain the state economy should be on their minds.
Guy Berkebile is the owner of Guy Chemical in Somerset, Pa., chairman of the Somerset County Republican Party, and a member of the Job Creators Network.