In Georgia, small businesses share how GOP Pro Growth tax plans continue to make a difference

PEACHTREE CITY, GA – During a hearing at an aircraft parts manufacturing facility in Peachtree City, Georgia, small business owners told the Ways and Means Committee how the Tax Cuts and Employment Act of 2017 has transformed their lives and livelihoods and Congress should work immediately to extend expiring provisions. Workers, farmers and small businesses all face the same challenges of inflation, rising interest rates, chronic labor shortages, unfair competition from China and supply chain struggles. Witnesses said President Biden’s proposed tax increases and an $80 billion increase in the IRS would make it harder to keep their doors open, hire new employees and compete against China-based competitors.

Chairman Smith highlighted how the Tax Cuts and Employment Law has benefited Georgian families and small businesses, while warning of the consequences if key provisions are not renewed:

“We have seen here in Georgia how good politics produce well-paying jobs. In 2017, after Republicans passed middle- and low-income tax breaks and pro-growth tax policies in the Tax Cuts and Jobs Act, Georgia Power was able to pass on $1.2 billion in benefits to its customers, reducing energy costs for millions of people lower Georgians. Businesses of all sizes have been able to hire new employees, expand, increase employee salaries and, in some cases, double their benefits. Every income bracket in Georgia received a tax cut, with your average family of four saving at least $2,000.

“Now some of the provisions of this law that have helped the companies before us today to expand, invest, hire and grow are about to expire. Allowing that to happen would make the current pain of the Biden economy far worse for workers, families and small businesses.”

For each witness, Chairman Smith asked one question — how have Republican tax provisions written into the Tax Cuts and Jobs Act, which are currently at risk of expiration, made a difference for your small business?

Lisa WintonFounder of a 38-person machining company in Georgia that makes products used in everything from refrigerators to the Mars rover shared her first-hand experience of how the Tax Cuts and Employment Act enabled her small business to create jobs and expand production:

“Our solutions can be found in everything from refrigerators to the Mars Rover to the Iron Dome weapons system used to protect Israel.

“Most of our competitors – as could be seen first-hand at the 2022 trade fairs – come mainly from Europe and Asia.

“I know America is strong when production is strong.

“In the year following the passage of the Tax Cuts and Employment Act, Winton Machine saw a 49 percent increase in sales and a 53 percent increase in machine shipments. We increased our total payroll by almost 150 percent and bought a new American made CNC machine…

“Unfortunately, three recent changes to the tax code make these goals more difficult…In early 2022, the maximum deduction for interest on business loans under Section 163(j) of the Tax Code was restricted from 30 percent of earnings before tax, interest, depreciation and amortization to 30 percent of earnings before interest and tax…the “full offsetting” of capital investments, or the “Bonus depreciation” started to be phased out this year…these two changes are like a tax on production growth…

“These changes will force our customers to continue using older devices instead of buying new ones or additional ones – or They will buy cheaper equipment from Asia or move more production abroad…

“For decades, we have been able to immediately sell 100 percent of our R&D expenses in the year in which they were incurred. But starting in 2022, we can only recoup a small portion of that cost each year… China allows a “super deduction” for manufacturing R&D of 200 percent of research costs…

“None of these tax changes are fair to our employees, their families and our communities.”

David Bergman, founder of NAECO, an aircraft parts maker that employs 44 people, told the committee that the supply chain crisis and trade policies that have made its exports less competitive with its Chinese rivals have hurt its business. Mr. Bergmann also shared that the removal of key provisions of the Tax Cuts and Employment Act made it difficult for his small business to expand:

“We’re in the materials business, and I’ve learned that there are indeed enough raw materials to meet demand, but Everything in between, from industrial capacity to logistics capacity to labor availability, seems to be in short supply.

“All of the job-creating equipment in this building was purchased using accelerated depreciation under section 179. I’m concerned about the repercussions. Industrial customers will not order from you unless you already have the machines on your floor. So growing manufacturers like us are taking a gamble and buying these complex six-figure machines in hopes that the orders will come.”

Alison CouchA mother of two, a prolific community volunteer and founder of an accounting firm that helps other small businesses, shared how inflation, labor shortages and supply chain crises have impacted her client’s bottom line and urged Congress to increase the $80 billion Democrat dollar hike to cancel IRS to overwhelm agency:

“We celebrated our 10th anniversary and the conclusion of Tax Day this week! I currently employ 9 employees.

“We are all so grateful to be past the days of COVID but Let’s not be so naive as to think the effects are gone. We continue to see a reduced workforce, supply chain issues and now incredible inflation.

“One tax rule that has continued to really help small businesses on a large scale has been the qualifying business income deduction…I am here today to ask you to act on behalf of hard working small business Americans and extend the 2017 TCJA…this deduction has been around for so many years now that letting it go doesn’t feel like a sunset, but like a tax hike.

“Proposal to add a 5 percent surcharge on corporate earnings ‘does not close a loophole’…Although it is stated on the owners’ individual Form 1040, this income does not go into their pockets; it is put back into the company to invest in employees, working capital and nest egg…

“The IRS continues to close phone lines, has long waits and long backlogs…The idea of ​​funding this agency an additional $80 billion to conduct audits that will add to all of their existing problems before the current backlog is cleared and current calls are processed in a timely manner is preposterous… I’m here today to ask you, NOT to fund the IRS with an additional $80 billion”

Matt LivingstonOwner of a small construction company and a family restaurant that has had to close three locations in the last year testified that labor shortages, inflation from eggs for the restaurants to lumber for houses and the supply chain crisis have both hurt his businesses:

“I’m not sure I could say anything change the minds of those who believe this economy is thriving or the best it’s ever been. Anyone who has these beliefs obviously hasn’t been to my small town.

“Due to staff shortages, we had to “close the doors” several times for a day or two.. We had to permanently close the doors of three and muster staff just to serve one…We’re trying to hire 30 people at Coach’s, a few months ago I sent out 92 W-2 forms. Employees expect higher wages for less work.

“We, as small business owners, have to increase our compensation to get people to work while paying more to sell goods just to keep our menu prices the same.

“We pay outrageous prices for eggs, which in turn increases the cost of every by-product thereof, mayonnaise, dressings, shortening, etc.Our grocery costs have increased dramatically from 28 percent to almost 40 percent just to avoid putting ourselves out of business and having to close the doors to another restaurant.

“We are a sports bar and sell an average of 17-20 cases of wings per week. We’ve been cut to 10 cases a week… We’re having trouble getting windows, doors, concrete, drywall tape, electrical boxes, wiring, and especially meter boxes.

“The higher interest rates are pushing people out of the current markets and causing higher mortgages… We average 2 contracts a month so we’re talking $84,000.00 annually [loss] to ½ percent [interest rate increase].

“We Americans are facing a situation that has caused our cost of living to increase and our life chances to decrease. I can only pray that this will be short lived and that we can give our children the opportunity to be proud to be Americans as we all once were.”