Business tax cuts are part of a sweeping package from President Donald Trump and congressional Republicans in what would be the first major reworking of the nation’s tax code in a generation.
And that’s caught the eye of Perry Barnett, whose Gainesville firm, Rushton, advises businesses on a number of issues, including planning, accounting and payroll services.
At the moment, the proposal is “a little light on details, for the lack of a better word,” said the CPA and partner for business services.
The bill’s big thrust is a nearly $6 trillion tax cut that would deeply reduce levies for corporations, simplify everyone’s brackets and nearly double the standard deduction used by most Americans.
Trump’s plan would reduce corporate and small business income tax rate to 15-20 percent from
the high 30s. Also, for a period of five years, companies could further reduce how much they pay by immediately writing off their investments.
“Under our framework, we will dramatically cut the business tax rate so that American companies and American workers can beat our foreign competitors and start winning again,” Trump has said.
U.S. Rep. Doug Collins, R-Gainesville, also touted the plan’s call for getting rid of the inheritance tax, or “death tax.”
“That affects a lot of businesses in Hall County and Northeast Georgia because ... there are a lot that are family-owned,” he said. “That’s a huge issue. I hear about it every day.”
Paying for the plan is the big issue and one thing that could be at stake is the interest deduction that companies can take, Barnett noted.
By removing or capping the deduction, “are they trying to incentivize companies to have less debt?” he said. “I don’t know what the purpose of that is, unless it’s just a ploy or an action to balance the budget.”
“Businesses typically do a thorough cost analysis before they make any kind of investment. If there’s a financing component to it, a tax credit component — those things are factored in,” said Barnett, also chairman of the Greater Hall Chamber of Commerce’s board of directors.
“And sometimes they don’t move forward if they go through all that (analysis) and can’t get a return on their investment.”
Still, he believes “there’s a good opportunity for (the legislation) to pass as long as it doesn’t add too much to the (nation’s) debt.
“I think everybody understands that in the short term if there’s a little bit of public debt to get things going, that’s fine,” said Barnett.
“But you don’t want to give 10-year tax breaks and get 20 years of debt that economic growth is not going to pay back.”
Mike Ryan, head of the Economics & Finance Department at the University of North Georgia, said if the tax plan “didn’t cause any economic growth ... then there would be a larger deficit.”
Conversely, “if it leads to enough growth, it would decrease the deficit.”
The Committee for a Responsible Federal Budget, a nonpartisan group that analyzes spending and taxes, has estimated the tax cuts at perhaps $5.8 trillion over the next 10 years.
Republicans have only identified about $3.6 trillion in offsetting revenues, meaning the cost to the federal deficit could be in the $2.2 trillion range, the group has said.
Still, no doubt, businesses have long clamored for relief from overregulation and taxes.
“Tax cuts for small business would be a wise economic move,” said David Robertson, vice president of DBR Associates, a company off Tanners Mill Road in southeast Hall that deals in epoxy rebuilding and coating.
“It will allow us small business operators the capital to invest in assets and or personnel we need in order to grow our businesses. We will be benefiting our local community by adding jobs.”
Robertson said that between his companies, “we have 13 employees and additional eight independent consultants,” he said.
In an email, he wrote he needs more workers, “but finances (taxes burden) is not allowing that.”
Initially, and perhaps predictably, the GOP plan hasn’t swayed Democrats.
“Each of these proposals would result in a massive windfall for the wealthiest Americans and provide almost no relief to middle-class taxpayers who need it most,” Senate Minority Leader Chuck Schumer, D-N.Y., has said.
But Charles Bullock, a political science expert at the University of Georgia, said he believes Trump and Republicans “are desperate to find a win.”
“They struck out on (replacing the Affordable Care Act), so if they fail to deliver on tax reform, then they’re going to have a hard time explaining it to their constituents,” he said. “I think Congress will do something.”
The proposal has the attention of at least one vocal Democrat, Sen. Bob Casey of Pennsylvania.
“There’s no question we should try to reduce (the corporate tax rate), but I don’t see how you pay for getting it down that low,” he has said. “Fifteen percent, that’s a huge hole if you can’t make the math work.”
Chris Clark, president and CEO of the Georgia Chamber, said he hopes to see Democrats
and Republicans work together on the issue.
“If Republicans try to pass tax reform on their own without Democrats, I think it’s very unlikely they’ll be successful,” he said. “I think there are Georgia Democrats who want to work on tax relief that benefits their constituents and small businesses.”
The Associated Press contributed to this report.