Small businesses see financial growth in first year of tax overhaul, but the cause remains unclear

Words by: Caelin Mills and Nicholas Hunter

Less than a year after President Donald Trump introduced his overhaul of the tax system, the Tax Cuts and Jobs Act of 2017, Portage County businesses are seeing an uptick in business growth and revenue. It is unclear, however, whether the bill is the cause for this success.

The bill, to be first implemented in fiscal year 2018, passed with the notion it would alleviate financial burdens on small business owners and middle class workers throughout the country.

Tax Cuts and Jobs Act by on Scribd

“The biggest winners will be the everyday American workers as jobs start pouring into our country, as companies start competing for American labor, and as wages start going up at levels that you haven’t seen in many years,” the president said back in December, in a press conference following the passage of the bill.

According to the Tax Foundation’s Taxes and Growth Model, the plan will cause a long term 1.7 percent increase in GDP, 1.5 percent wage growth and the equivalent of 339,000 full-time jobs.

Portage County’s unemployment rate sits above the national average; in December 2017, when the bill was signed into law, Portage County’s unemployment rate was 4.7 percent, compared to the national average of 4.1 percent.

The Tax Cuts and Jobs Act keeps the seven tax bracket system in place, lowering five of the seven brackets.

Most noticeably, this impacts single filers making between $9,525 and $157,500 annually, as well as married couples making between $19,050 and $237,950. These taxpayers will see their rates drop by three to four percent.

This shift will have a big impact on Portage County, as Census Bureau data indicates about 94.5 percent of workers in Portage County make under $100,000 annually.

As for what impact the bill will have on the county, Bradford Ehrhart, the president of the Portage County Development Board, said they’ve already been experiencing economic growth, so the bill’s impact may never be fully clear.

“Since the election of 2016, we’re seeing a lot of positive activity in the economy,” Ehrhart said. “We’re experiencing labor shortages and we have a shortage of good, available buildings — and these are all good things, in a way. The economic activity is very strong right now in Portage county.”

Photo sourced from http://www.portagedevbd.org

Genevieve Smith, co-owner of Brimfield Bread Oven, said her business has seen some of this growth in the past year, although it is hard for her to tell if that is due to anything the government is doing.

“We’ve had some good press in the past couple years, so I feel like it’s just that,” Smith said. “Some of that could be affected by (the tax bill) too, though because people are willing to spend more if they feel like they have more money. That does make an impact.”

Smith said her mother and sister are both artists and have seen more success over the past year.

“People are willing to actually buy art again, where I feel like there was a while when people just weren’t spending as much on non-necessary items,” Smith said.

Photo sourced from LinkedIn

Smith also said it may be easier for a more established company to see an immediate impact, compared to a newer business still finding its place in the community.

“I don’t exactly know why people are coming here, but it’s not seeming to have a negative impact,” Smith said.

The bill lowers the corporate tax rate to 21 percent, among other cuts to business tax rates.

Large companies made noteworthy investments after the tax plan passed, including bonuses for employees, contributions to employee’s 401(k) plans, as well as additional business investments and charitable donations.

Michelle Sahr, owner of Off the Wagon, a toy and novelty store in Kent, said her business is in the lowest corporate tax bracket and will not know the full picture until the end of the year.

“We have an uptick in business, but then again we have been trending that way since 2009,” Sahr said.

She does not think the tax plan is a factor in the increased business.
“I think only the very few savvy financial people have an inkling on exactly how this will play out for them personally,” Sahr said.

Ehrhart said he expects the plan to have a positive impact on small businesses like Off the Wagon and the Bread Oven.

“One of the things it’s going to do is enable companies to make investments and things like that,”  Ehrhart said. “Those are important things for companies.”

Sahr credits a larger product selection, added space and a focus on increasing internet sales for the increased revenue.

Sahr has added a new bookkeeper position and increased wages this year, hinting she may do so again if the year ends strongly.

Photo sourced from LinkedIn

“I will also invest some of the money back into the business,” Sahr said.

Nick: Interviews, audio, writing
Caelin: Multimedia components (pull quotes, featured image, Infogram, Scribd,) links, writing