Small business owners are pushing back against Democratic mischaracterizations of President Donald Trump's signature Tax Cuts and Jobs Act.
More than a year after the legislation went into effect—slashing personal and corporate tax rates across the board—the focus has shifted from worker bonuses and wage increases to shrinking tax refunds. The latter, resulting from a decrease in the level of taxes paid throughout the year and changes to the Internal Revenue Service's withholding formula, has increasingly become fodder for Democrats eager to portray the cuts as a "scam" to benefit the wealthy.
In reality, the issue is more complicated, as Alfredo Ortiz, the president of the Jobs Creator Network (JCN), told the Washington Free Beacon. Ortiz's group, which represents a diverse coalition of small businesses and bills itself "as the voice of Main Street," has been working to educate voters on the benefits of the tax cuts ahead of the April 15 IRS filing deadline. JCN believes that if Democrats are allowed to win the debate over tax refunds, it will make it easier for the party to eventually push for a full repeal of the Trump tax cuts at a later date.
"There's a lot of attention on the size of the tax refund," Ortiz said during an exclusive interview. "Folks need to understand that you're going to be paying less money to the government because of the tax cuts, so you'll be getting less money when it's time to file."
He pointed to the fact that on average individual tax refunds are only down 1.1 percent—or $31—from 2018 to argue that more drastic reports of reduced returns are "off base."
"The news media is focusing on refund size, however, that isn't the whole picture," Ortiz said. "When you look at it you see [individuals and businesses] are paying less in taxes overall."
The "real story" behind the tax cuts isn't just in the "total amount of tax savings," but also in the "broader economic impact," according to Ortiz.
"Two-thirds of the job growth is in the hands of small business owners," he said. "The big thing happening with this economic boom is that small business owners have been able to continue investing in their businesses. Whether its buying equipment needed to grow their business or investing right back into their people through higher wages and better benefits."
One of the small business entrepreneurs that benefited from the tax cuts was Joseph Semprevivo, a JCN member from Florida who runs a diabetic-friendly baked goods company. The legislation's corporate tax cuts and expanded business deductions saved Semprevivo's business $30,000 over the year. Instead of pocketing the money, he chose to share it with his employees.
"As a result of the tax cuts we hired five new team members and we gave all our employees raises between $3,250 and $5,100," Semprevivo told the Free Beacon. "This was my way of telling my employees we love you, we want to retain you… and you're valuable."
Semprevivo said the tax cuts didn't just benefit his company and his employees, but also contributed positively to the larger ecosystem.
"One of my employees used his raise to buy a reliable car," Semprevivo said "He went out and bought a car that was built in Detroit by a union member. A truck driver was paid to transport the car to Florida, the salesperson got a commission, the car dealership made a profit, and the local tax base received revenue. It goes on and on in terms of all the people that benefited."
"There's been a lot of talk about how people are getting less money back and the tax cuts aren't beneficial, the opposite has been true for myself and my employees," he added.
Other small business entrepreneurs affiliated with JCN likewise praised the tax cuts and other provisions within the legislation.
Guy Berkebile, the owner of a chemical company in Pennsylvania, said the new 100 percent capital allowance was vital to his firm's growth in 2018. The allowance ensures that manufacturing companies like Berkebile's can now deduct costs associated with investments in new machinery at a faster rate than previously allowed.
"We're a chemical manufacturer and rely on machinery for everyday tasks," Berkebile said. "Previously it would have taken almost a decade to write off the cost of one piece of equipment, without taking into account depreciation."
Berkebile said the expensing allowance helped his firm increase its bottomline which translated to 29 new hires as well as increased wages and benefits for existing employees.
Susan Kochevar, who operates a drive-in theatre in Colorado, told the Free Beacon the tax cuts were "tremendously" helpful not only in boosting consumer spending, but also in cushioning the impact of local taxes and regulations.
"One of the problems we're facing and have faced is that taxes and regulations have expanded exponentially since I started running business," Kochevar said. "My state passed a minimum wage amendment. Its minimum wage went up last year, will go up this year, and then again next year. Those tax cuts helped me weather that rise, it helped me give my current staff a raise while still hiring new employees at the new rate."
Kochevar's comments stand in contrast to Democratic elected officials in Colorado and other blue states like New York, and California. Democrats from such states have lambasted the Tax Cuts and Jobs Act for its elimination of the State and Local Tax Deduction, which favored high-income earners in high-tax states.
"When I hear Democrats in Congress, especially Nancy Pelosi, mention lower tax refunds and talk about reversing the Trump tax cuts … it scares the heck out of me," Kochevar added. "That's going to destroy small businesses like mine."