As the dust settles around December’s Tax Cuts and Jobs Act, small business owners are giving employees raises, buying new equipment, and expanding their operations.
A quarter of NFIB member respondents plan on adding or expanding employee benefits, 42 percent plan on hiring additional staff, 44 percent plan on raising wages, 32 percent plan on making a capital expenditure, and 19 percent plan on expanding facilities, according to NFIB’s Share Your Story Tax Survey of more than 300 NFIB member respondents.
“First and foremost, we are happy to see that the tax reforms will be putting a little extra into our employees’ pockets,” said Claudia Kovach, owner of Youngstown, Ohio-based City Machine Technologies Inc. “When you have less to pay for taxes, you have more money to hire more staff, increase wages and buy new equipment.”
The survey also explored the most important aspects of the tax law to small business owners. Respondents ranked from most to least important: the 20 percent deduction on business income for a pass-through entity; the lowered individual income tax rates; the increased amounts exempt from federal estate tax; increased limit on Section 179 expensing; and the allowance of a cash accounting method for business up to $25 million.
“Tax reform is twofold for our small business because the 20 percent deduction allows us greater revenues without additional tax liabilities—of at least 20 percent—and in turn we will spend that extra revenue locally,” Angela Gibson, owner of Utility Trench Technologies based in Spokane, Washington, said in the survey. “This tax reform helps our customers also.”
Gibson plans to expand facilities, hire additional staff, make a capital expenditure, and raise wages.
“Tax Reform allows my business options to exercise many small business struggles with high tax rate,” said Jim Wang, owner of Footwork International Inc. in Torrance, California. “By allowing higher retaining income rate, this enables us to exercise growth options such as staffing, wage increase, purchasing power to keep our business competitive both domestically and globally.”