DES MOINES -- A half-dozen Iowa small business owners told a top U.S. official in Iowa on Friday that federal tax cuts are boosting workers’ wages and businesses’ investment and confidence.
The anecdotal evidence presented to U.S. Small Business Administrator Linda McMahon does not match federal data in at least one instance: average hourly wages in the U.S. have not changed in the past year.
McMahon was joined for the roundtable discussion on issues facing small businesses by Gov. Kim Reynolds, U.S. Sens. Chuck Grassley and Joni Ernst, and six women who own small businesses in Iowa.
Reynolds led the discussion, asking each of the six business owners to discuss how federal tax cuts have benefited their businesses. The package of tax cuts, which was passed by Congress and signed into law by President Donald Trump in December of 2017, reduced tax rates for businesses and most individuals.
The Iowa small business owners thanked McMahon for the tax cuts, which they said helped them reinvest in their businesses. The planned savings were used to purchase new equipment, hire more staff and reinstitute bonuses, they said.
“As with most small businesses, that extra, so to speak, that will be coming next April does not go into our pocket. It goes back into the business,” said Mary Anne Kennedy, owner of Primary Source, which helps companies design promotional products.
McMahon, after hearing from the six small business owners, said the economy is growing and business confidence is high.
“It’s an exciting time in our country,” McMahon said.
The tax cuts have not impacted average hourly wages, which remained unchanged from June 2017 to June 2018, according to data published this week by the federal Bureau of Labor Statistics.
McMahon said she had not seen the data, but neither was she disputing it. She said most business people she talks to around the country say they are increasing wages.
“I see that all over the country, and more small businesses are growing,” McMahon said.
McMahon said she thinks as more workers enter the workforce, competition for those workers will drive up wages.
The nonpartisan Tax Foundation projected the federal tax cuts will lead to economic growth — a 1.7 percent increase in gross domestic product — 1.5 percent higher wages and 339,000 more jobs, and spur $1 trillion in federal tax revenue from that economic growth.
The tax cuts are projected to push the federal debt to $29 trillion by 2028, according to the Congressional Budget Office. The national debt currently stands at $21 trillion.