The Republican-sponsored tax overhaul bills passed by the Senate and House — two versions that are yet to be merged into a single law that will change personal and business tax returns in large and small ways — have local small business owners hopeful yet cautious.
Bruce Roth, president of Quality Overhead Door in South Toledo, said both versions will stimulate the nation's economy and would help him expand his business.
“I think it is good for my employees; it is good for business. I think it was great when Reagan did it, and it is great when Trump will do it,” Mr. Roth said. “On the flip side, I have some concern. 2017 has been an incredible year, and I am concerned where we will get the people if the economy continues to expand.”
The overhaul will change the credits people can take, what can be deducted, and how much will be paid in taxes, said Dave Baymiller, a certified public accountant and tax partner with Maumee-based firm Gilmore Jasion Mahler.
The House and Senate versions differ on key points, such as when the individual provisions expire, the mandate to buy health insurance, and even the tax brackets and rates, Mr. Baymiller said. Many of the firm’s clients are already inquiring what the final version will mean.
“They will work out the differences because there are a number of differences,” he said. “We don't even know where the tax brackets will be. We are assuming it will apply as of Jan. 1, 2018, but there might be some retroactive to 2017 ... This is expected to be a high reduction in taxes, but [we’re] hoping that this tax reform will generate more income, more disposable income, to allow businesses to be able to provide more jobs and to stimulate the economy.”
Mr. Baymiller said eliminating the deductions for state and local taxes, including real estate taxes, will have an affect for many taxpayers.
“It appears right now, and it is the same in the House and Senate, there will be no deduction for state and local income tax,” he said.
Jules Webster, owner of the Art Supply Depo in Toledo and Bowling Green, said she was able to open a second location from previous tax savings.
“I switched accountants after being open in Toledo and I was able to save money on my taxes,” she said. “Without the additional savings, there is no way I would have been able to open the new store.”
Ms. Webster said it is too early to know what will happen with the tax overhaul bills, but she anticipates businesses will be able to expand.
“If it really does work out that small business owners can save on taxes, then great,” she said. “When I do get a reduction in my taxes, I put it into my stores and I have employed more people.”
Tom Brady, founder, chairman, and chief executive of Plastic Technologies Inc., a plastic packaging development company in Holland, also had high hopes for the final bill.
“Generally speaking, I think you have got to be supportive of almost any bill that reduces the tax burden, especially on small business,” Mr. Brady said. “Small businesses like ours will reinvest ... and I think lowering the tax burdens on individuals will be a good thing.”
The senate version would keep seven tax brackets but changes the rates to mostly lower levels. The House version has four brackets — 12, 25, 35, and 39.6 percents.
The standard deduction is increased to $12,000 from $6,350 for single filers, $18,000 from $9,350 for heads of household, and $24,000 from $12,700 for joint filers in the Senate version. The House version increases it to $12,200 for single filers, $18,300 for heads of household, and $24,400 for joint filers.
Gary Johnson — a Democrat, newly elected Toledo councilman, and owner of commercial painting and flooring firm AFI Contractors — said he does not oppose the tax overhaul but questioned if it was given enough scrutiny.
“It is a lopsided bill that favors very rich investors and large companies, and as a small business person, I do not feel I will benefit as much as they will,” he said. “If they had done something like an earned income tax credit that would give me more of an incentive to hire people.”
Mr. Johnson said changes to health care in the overhaul could be problematic.
“Small businesses that had the ability to offer health care, they may find it a little more difficult,” he said.
The overhaul includes a repeal of an Affordable Care Act provision that requires most people to have health insurance or pay a penalty.
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