Keystone Clippers has exceeded expectations. Owner Al Rodriguez is now “ahead of the game” due to last year’s Tax Cuts and Jobs Act. He has added five shops, hired 50 extra workers—a 27 percent increase from last year—and is committed to open at least three locations in 2019. A new shop costs $200,000, a hefty sum for those trying to make it in this competitive market. However, Rodriguez is optimistic, “I’m hoping it will have an impact in a positive way” as more people enjoy a great haircut at a modest price.
More than a year after the federal tax cuts went into effect, Pittsburgh area small businesses continue to cite tax reform as the catalyst for growth, expansion, and new employee benefits.
Len Caric’s company, Uncle Charley’s Sausage, expanded their workforce in Pittsburgh. Caric has benefited from the 100 percent deduction on capital expenditures. He can now “get the full depreciation in the same year” instead of the previous 50 percent. “Tax reform just makes it easier” for more people to bring home the bacon.
Transportation company Pitt Ohio was one of many companies that decided to invest in their workers by giving each employee a $1,000 bonus due to tax reform. They also stood apart as the business awarded their drivers with a second pay increase. According to Owner and President Charles Hammel III, “We gave it all back, every bit of it.”
These stories are possible because of the Tax Cuts and Jobs Act, which makes sure more money stays in the pockets of Pennsylvania workers.
Despite the boost from federal reform, state taxes remain an obstacle to expansion. Pennsylvania levies the third highest state corporate tax rate at 9.99 percent. The keystone state is also losing residents to lower-tax states—an indicator of excessive taxes.
For Pennsylvania to become competitive, reforming the state tax code is imperative. Lawmakers need to enact simple, fair, and reliable tax reforms including lowering the personal income tax, reducing the Corporate Net Income Tax, lowering and broadening the state sales tax, and simplifying the state tax code.
Governor Wolf's latest budget proposal includes a reduction of the Corporate Net Income Tax from 9.99 percent to 5.99 over five years. That’s a good start, but more should be done to make Pennsylvania’s tax code competitive.
From haircuts to semi-trucks, we can keep all sectors of our economy growing if lawmakers make state tax reform a priority this budget season.