By JOSEPH SEMPREVIVO
When Chipotle recently announced $50 million in new tax savings, the mainstream media predictably pounced on the news.
The Denver-based company is, after all, America’s most famous burrito maker and thousands of employees now stand to benefit from President Trump’s tax cuts. Chipotle will make all of its hourly crew members eligible for a $250 bonus, while general managers will be able to earn $1,000. The rest of the $50 million in tax savings will enhance existing restaurant locations, with about $20,000 allocated per store to upgrade dining areas and improve the guest experience.
To date, more than 370 U.S. employers have announced pay hikes, 401(k) increases, or bonuses as a result of the Tax Cuts and Jobs Act. And nearly four million Americans have already reaped the benefits of greater take-home pay.
But, as so often happens, the news cycle passed small businesses by. While many media outlets covered the “major companies” benefitting from tax cuts, surprisingly few covered the boon to America’s smallest firms, which will also see lower rates and higher deductions.
Whether they’re in the spotlight or not, America’s small businesses — all 29 million of them — employ nearly 60 million workers and account for two-thirds of all new U.S. jobs. They may not be household names, but their success is a bellwether for the economy writ large.
So don’t forget: These job creators are benefitting from tax cuts too — bigly.
I know because I’m one of them. As the president and CEO of Joseph’s Lite Cookies in Florida, I run a family-owned, sugar-free cookie business. We bake more than 12 million sugar-free cookies a day, in addition to supplying other diabetic-friendly products.
For years, I sent nearly 50 percent of my business income to the government — federal, state, and local. As a pass-through business, my income was taxed at the top federal rate of 39.6 percent before the state and local tax burden was even included.
But the new tax code makes for a brighter future. Not only has the top federal rate dropped to 37 percent, but I’ll also qualify for the 20 percent standard deduction and immediate expensing, which incentivizes employers to write off the total cost of business expense in a given tax year instead of spreading tax savings out over numerous years with a depreciation schedule. All three provisions will allow Joseph’s Lite Cookies to save money on investments and use the tax savings to reward our hardworking employees.
And reward them I shall: I’m not only giving raises to four key employees — half of our workforce — but also purchasing new computer systems and creating new product packaging for international expansion. Moreover, we’re investing in marketing campaigns for new products, namely Joseph’s Sugar Free pancake syrup.
And I’m only one small business owner. Dina Rubio, owner of the Florida-based Don Ramon Restaurant not too far from us, plans to open a takeout window and set up a customer bar — generating up to eight new jobs. Guy Berkebile, president of the Pennsylvania-based Guy Chemical Company, will purchase new equipment and open a second manufacturing plant.
Many of the job creators who have already announced tax-induced employee payouts are small in scale. The Anfinson Farm Store, a family-owned business in Iowa, recently awarded $1,000 bonuses to all full-time employees and raised their wages by five percent. The California-based Kramerica Properties went even further, giving workers a $2,000 tax cut bonus. Missouri-based Dynamic Fastener, meanwhile, will open a new paint shop, buy new equipment, and hire more employees to make expansion possible.
While our payrolls pale in comparison to Chipotle’s, the compound impact of small business is far-reaching. Not only do our products and services satisfy Americans across the country, but we are inextricably linked to our local communities. Mom-and-pop diners, the bookstore down the block, and your local movie theater all form the social fabric that binds Main Street America together.
Whether the mainstream media covers it or not, 2018 is the year of the small business revolution.
(Joseph Semprevivo is the president and CEO of Joseph’s Lite Cookies in Florida. He is an adjunct professor of finance, real estate and insurance at Indian River State College and the bestselling author of “Madness, Miracles, Millions.”)