The long-anticipated passage of the GOP tax bill by Congress, now expected to be approved Wednesday after a hiccup Tuesday, is bringing smiles to those who run businesses and farms in the central San Joaquin Valley.
The bill would lower the corporate tax rate to 21 percent, down from 35 percent, which is welcomed by business owners who are incorporated.
Carl Carlsen, the owner of Western Ag & Turf in Madera, said he’s complained many times about the amount he pays in business tax. “You feel you’re not working for yourself anymore,” Carlsen said.
If we can drop 15 percent off our taxes, that is a huge deal for me.
Carl Carlsen, Western Ag & Turf
The savings would allow Carlsen to hire more employees or pay higher wages. The company, founded in 1993, has 25 workers.
By lowering the corporate tax rate to 21 percent, the tax bill will give corporations an incentive to expand, said Paul Saldana, president and CEO of the Economic Development Corp. in Tulare County.
“We see companies starting to call us more often and talk to about their plans,” Saldana said. “It started about six weeks ago … The buzz we’re hearing from accountants and site locators – they’re very positive.”
The tax bill will also be good for farmers like dairyman Tom Barcellos of Porterville.
If his taxes go down as expected, he can save more money in profitable years, Barcellos said. That’s important in farming because some years are money losers.
“On down years, it’ll provide income,” he said.
Barcellos said the tax bill also includes provisions important to farming, such as keeping the ability to quickly depreciate certain purchases and the interest deduction on borrowed money.
Additionally, the tax cut may make it easier to finance a new dairy, he said.
There hasn’t been too much time to analyze its effects on farms and ranches.
Josh Rolph, California Farm Bureau Federation
Advocates says the GOP tax bill will boost for the economy. But when asked if the new dairy to replace an older one would generate more jobs on the farm, Barcellos said a new one will require less labor because it will be more efficient.
Josh Rolph, federal policy manager for the The California Farm Bureau Federation, said the tax bill has been improved over the last month or two but it moved fast through Congress in the last few weeks.
“There hasn’t been too much time to analyze its effects on farms and ranches,” he said.
Lowering corporate tax rates may cause some farms to incorporate to take advantage the lower rates, he said. Currently, most farms are corporations, family partnerships, sole proprietorships and other entities in which income is taxed at individual rates, he said.
Assuming the bill passes as expected and is signed by President Trump, the tax bill may give ammunition to candidates for office seeking to unseat Republican incumbents. Democrat Andrew Janz, running for Congress against Rep. Devin Nunes, R-Tulare, issued a statement blasting the bill.
It started about six weeks ago …The buzz we’re hearing from accountants and site locators – they’re very positive.
Paul Saldana, Economic Development Corporation Serving Tulare County
“Devin Nunes has shown yet again that he cares more about pleasing his wealthy donors than fighting for families here in the Valley,” the statement said. “Come November (2018), voters will remember Nunes voting for this middle-class tax hike. There is no excuse for endangering future generations with massive debt to cut taxes for the very few, wealthiest people and corporations.”
Nunes had not issued a statement as of Tuesday evening about the tax plan being passed.