Tax Cuts Causing Small Businesses to Invest & Hire
The business economy was stuck in a slump for a few years, but since the tax cut bill was passed in 2017, this has created enthusiasm and increased investment for small businesses across the US. Linda McMahon, chief of the Small Business Association (SBA) has traveled to 39 states and spoken to over 700 small business owners to get a real sense of the impact the tax cut and reform has made.
In her interview with CNBC, McMahon gives some examples of how various businesses are using the reform to their advantage. One landscaper in Florida was confident enough to buy a company truck since he’s able to write it all off this year. On top of this, he’s expecting to save 7-8% on his taxes. A bread bakery owner is now able to purchase a $1.5 million dollar oven, expand his shop, and hire more employees this year.
These are just two examples, so you can imagine the thousands of others across the country that will be flourishing this year.
Unemployment rates are at an 18 year low of 3.8%, and the NFIB surveys are showing the highest business optimism the economy has seen in decades. The May jobs report indicated higher numbers than expected, with the biggest job additions in retail, healthcare, construction, and other service positions. Of course, this also increases the chances of a June interest rate hike to continue balancing out inflation rates.
What’s even more exciting, is the affect this is having on minorities and women. According to the Bureau of Labor Statistics, the unemployment rate of African-Americans dropped in May from 7.7% to 5.9%, which is the lowest rate since the Bureau began collecting stats in 1972 – the rate has never gone below 7%. Hispanic rates are expected to be the lowest ever, and Asian rates have dropped from 3 to 2.1%. Women unemployment is on track to be the lowest annual rate since 1953.
This is also having an impact on other parts of the economy. Wage growth is the highest it’s been since the 2008 recession, enrollment into programs such as Medicaid have dropped by over 700,000, and the food stamp program has also seen a drop of over 1 million between December 2017 and March 2018.
