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For Tax Day 2018 the theme was: Out with the old and in with the new.
On tables throughout the room at the U.S. Chamber sat piggy banks surrounded by shredded pieces of the tax code.
The U.S. Chamber celebrated the last day of an antiquated, growth-inhibiting tax code by hosting Senator Pat Toomey (R-PA) and business leaders from across the country to chat about how tax reform is helping their companies, employees, and the economy.
Sen. Toomey, who took a leading role in getting historic tax reform through the Senate last year, laid out the economic situation that required pro-growth reform.
For too long the U.S. economy experienced “pathetic growth,” he said. He and other members of Congress rejected the contention that "America is now simply consigned to weak or mediocre growth?"
"I have always believed we are entirely capable of really strong economic growth indefinitely if we have the right policies,” he said. “And I think that's what created the economic backdrop and the need to do something."
That "something" was the first major tax reform in over three decades.
By lowering tax rates for individuals and businesses, along with other provisions like full expensing of business investment, tax reform is "lowering the after-tax cost of making an investment” and spurring economic growth.
For instance, tax reform now allows businesses to fully expense investment in the year it is purchased. This reduces the amount of money a business needs to finance the investment.
“If you diminish the amount that has to be financed, you lower the cost. If you then also lower the top corporate rate from 35% to 21%, you're lowering the tax paid on the return of that capital,” Toomey explained.
Increased spending on buildings, tools, computers, and other investments boosts productivity.
“By doing that you expand the productive capacity of the American economy,” said Toomey. “And when you do that's the definition of economic growth."
The U.S. Chamber has compiled a list of nearly 500 companies who have announced new investments in their businesses, employees, and communities.
Sen. Toomey offered the example of Carpenter Technology in Reading, PA. The company makes specialty steel products for aerospace and medical devices.
"As a result of the tax reform and the fact that we're lowering the cost of deploying capital, they're going to deploy this year a $100 million steel mill," Toomey said.
Other businesses are following suit.
Bay Electric, a Newport News, VA, company will increase its business investment by $500,000 this year.
“We have large pieces of equipment--bucket trucks and line trucks,” said John Biagas, president and CEO. “We're going to recycle out some of the older equipment and bring in the new equipment in so we can be more efficient."
Melissa Bercier, president and owner of Couch Clarity, a private practice psychotherapy service in Chicago's suburbs, is investing in training for her employees. "Any type of team development we can provide for our staff is so important to keep up with the research in mental health,” she explained.
Tony Cavanaugh, senior vice president for government affairs at American Electric Power, said, "We'll invest $17.7 billion in the next three years on our system," because of the lower corporate tax rate.
As a result, "We'll be able to put more people to work," but "the long-term benefit is it makes our system more efficient.”
Along with investment, tax reform means more jobs and bigger paychecks for workers.
"We're actively hiring people,” said Biagas. “This year, we have 21 apprentices starting. Also, we're hiring 12 electricians and two project managers."
And workers are seeing more money in their pockets, Biagas said. "Some are taking the money that they're saving from the taxes and they're putting into their 401(k) accounts."
Bercier also passed the benefits of tax reform to her employees: "Being able to provide end-of-year bonuses is always a plus. It makes my heart sing to be able to do that for my employees."
"We've seen half of our member companies increasing salaries above what they believed they would going into [tax reform],” and a quarter have issued bonuses, noted Bill Sullivan, president and CEO of the American Trucking Association.
Whether it’s through increased business investment, more jobs, or more pay, we're seeing tax reform’s benefits all across the country.