By Debbie McFarland
Some businesses succeed in any economic climate; others flourish and flounder in-line with the broader economy.
Businesses like mine that depend on disposable consumer income are enjoying the current economic boom. Economic growth has hovered around three percent in the last three quarters. Wages are finally rising at a steady clip. And consumer sentiment is at near-record highs.
Recently passed federal tax cuts are partially to thank. They’ve boosted paychecks as a result of less federal tax withholding and millions of tax-cut induced raises. Sen. Claire McCaskill and her Democratic colleagues who fiercely opposed tax cuts should take note.
So how do tax cuts contribute to economic growth that helps Missouri’s businesses and families? They leave more money in the private economy, where it can be invested, spent, and circulated. This money gives life to local communities rather than going off to die in Washington, D.C.
Consider the story of Gina Coats, an executive at a plumbing company in Springfield. She told the New York Times that all her employees seem more upbeat as a result of their bigger paycheck due to less tax withholding. “It’s causing people to let go of their money a little more easily.”
That includes herself. Her tax cut combined with the additional business at her company resulting from the tax cut-induced economic boom have led her to pull the trigger on putting a new roof on her house. These are stories that business owners who depend on disposable income love to hear.
Tax cuts are not only helping small businesses by creating more customers. They are also directly helping our bottom lines.
The tax cuts created the biggest small business tax cut in the country’s history, delivering a new 20 percent tax deduction. Consider a run-of-the-mill small business with $150,000 in taxable earnings. Under the new tax code, it will be able to protect $30,000 from the federal government, funds which it can use to better compete against its corporate and international competitors.
The tax cuts also allow small businesses to immediately expense business purchases, making it cheaper to expand into new product lines and locations. Not to mention an end to complex depreciation schedules.
Small businesses in Missouri and across the country are using these savings to raise wages, hire, and expand. For instance, Mid-AM Metal Forming in Rogersville, Iron Horse Energy Services in Eolia, and Dynamic Fasteners in Raytown are just some of the examples of state businesses giving their employees significant tax cut-induced raises.
I’m using my tax cut savings to upgrade my design software and showroom, which require hiring numerous building trades contractors and expanding into new product lines.
And don’t forget about corporations. Major American companies that employ thousands of Missourians, including Walmart, Tyson Foods, Lowe’s, and The Home Depot, are also giving their employees significant pay increases as a result of their tax cut savings.
What about the claim made by Sen. McCaskill, among other leading Democrats, that tax cuts are merely a gift to the rich? Tax cuts are “not going to be helpful to the vast majority of people in my state that are sitting around the kitchen table trying to figure out how [to] come out even at the end of the month,” she said last month.
In reality, just the opposite is true. Tax cuts have given ordinary Americans some long-overdue financial relief. From less federal withholding alone, the median U.S. household will save more than $1,600 a year. That’s enough to cover phone, electric, or transportation bills. Those with kids or those who work at businesses like mine will save even more.
Missouri voters must demand to know whether Sen. McCaskill stands with Democratic Party leadership in their vow to repeal the tax cut — a move that would raise taxes on millions of ordinary Missourians. If so, voters must let her know at the ballot box that they don’t want their tax cut taken away.
Families and small businesses across the state are all alike; they depend on this tax cut income.
Debbie McFarland is the owner of McFarland Interiors in St. Charles.