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What does once-in-a-generation tax reform mean for a business?
For David Mahoney, CEO of Upstate New York’s Noble Gas Solutions, who bought the company in 1986 just before President Ronald Reagan’s tax reform, it’s nothing he’s ever seen as a business owner.
"These tax breaks, maybe for the first time in my history here … I want to see what happens … but I might start to feel the love, like somebody else actually cares about me” as a small business owner.
After taking a gut punch in the last recession, Noble Gas — named for selling all six noble gases along with compressed air, acetylene, propane, and other industrial, medical, and specialty gases — rebounded and is having a gangbuster 2017.
But Mahoney hopes for more growth and sees tax reform as fueling that.
During the Great Recession, Mahoney saw his company’s revenue fall 15%. But after enduring business in upstate New York being flat for eight years, this year, it’s “just taken off,” with revenues up 12%. With a good December, Mahoney expects Noble Gas’s revenues to pass 2008 levels and hit $10 million.
Mahoney sees some of this rebound stemming from buying and renovating a warehouse in Albany two years ago and investing more money into the business. Along with that, Mahoney saw an attitude change after the 2016 election. "I think there were so many people excited about there being a new president," he said.
Expensing is great for investment
One part of tax reform Mahoney is excited about is full expensing. “That’s huge,” he declared.
Noble Gas will be able to immediately write off business investments off its taxes.
For example, this year, Noble Gas bought an automated cylinder filling island. Under the current law, it was unable to expense $100,000 of that purchase. If making a similar purchase next year, it could immediately expense the over $600,000 cost and reinvest money back into the company.
"I think [expensing] will trigger a tremendous amount of growth. I really believe that,” Mahoney cheered. “I think of people in all kinds of industries that will be making that capital equipment investment because they get to write it off."
Take construction companies, for example. "You start to talk to a contractor and he basically finds out he'll be able to fully depreciate equipment purchases, they'll invest in trucks, they'll invest in machinery, equipment," Mahoney explained.
Take the investments from millions of small businesses across the country, combine them with what we are seeing from larger firms, and big things will happen. This increased business investment from companies of all sizes will ensure faster, sustained economic growth.
Tax reform means more good-paying jobs
When businesses of all sizes invest more in buildings, equipment, and tools to become more productive, we’ll see more good-paying jobs.
“Businesses are trying to be smart and run lean so you can be as efficient as possible,” Mahoney said. But “there’s only so much efficiency before you need to add people.”
Tax reform will help workers become more productive and earn higher wages, which will be great news for Noble employees.
"As money gets freed up, I'll invest in the people that I have here," insisted Mahoney. "My people will definitely see raises due to this, but it will put us in a position to add more people too."
In the end, more business investment in workers and equipment will strengthening our economy.
Mahoney welcomes the sales that will come from increased economic growth. “If the economy grows, jobs will grow with it,” he said.