As Tax Day 2019 swiftly approaches, numerous entrepreneurs are seeing new benefits from the Tax Cuts & Jobs Act, enabling them to grow their ventures and hire additional staff.
I recently co-hosted the White House Manufacturing Roundtable at which about 20 small business owners discussed the resurgence of manufacturing in the chemical, construction, consumer goods, electrical, metallurgical and technology industries.
They shared stories of how they leveraged the tax cuts to invest in their companies and offer higher wages, bonuses or both to their employees. With what they were saving in taxes, firm after firm detailed new types of equipment that they were able to purchase or investments they were able to make to expand their footprint.
Never before have I seen the genuine optimism about entrepreneurship and the American economy that was evident at the roundtable. There were two clear conclusions: small businesses are flourishing and creating jobs while employees are receiving larger paychecks.
National research supports the stories I heard. Yahoo! Finance reported that American workers appear to be getting bigger paychecks even though they were working the same number of hours. Fox Business found that average hourly wages rose a better-than-expected 3.4% over the previous year, a rate of increase not seen in a decade.
These experiences reflect our nation’s continuing economic boom. March was the 101st consecutive month of positive job growth. This is the longest sustained period of economic growth since World War II. For the first time, there are more job openings than people looking for work.
A decade ago, unemployment rates were soaring, according to U.S. Bureau of Labor Statistics. In the Buffalo-Niagara Falls area, for example, the unemployment rate was 8.3% rate; today it is 3.9%. Puerto Rico’s unemployment rate was a staggering 15%; thanks to record investment since hurricanes Maria and Irma and the Administration’s creation of Opportunity Zones on the island, unemployment is now 8.5% and falling.
As job creation soars and wages continue to grow, our nation’s economy is benefiting all Americans — especially those in small business.
As Tax Day approaches, many entrepreneurs who operate several types of small businesses, such as sole proprietorships, S corporations, and partnerships, may qualify for a 20% income deduction. Since the business income “passes through” to the individual business owner’s income for tax purposes, the tax reform allows these individuals to deduct 20% from their total income.
As Ben Franklin famously wrote in 1789, “in this world nothing can be said to be certain, except death and taxes.” But thankfully, 230 years later, tax reform makes one half of that premise less agonizing.
Author Steve Bulger is the Regional Administrator for the SBA’s Atlantic Regional Administrator, serving the States of New York, New Jersey, the Commonwealth of Puerto Rico and the U.S. Virgin Islands.