Re: “Our View: Companies, shareholders reaping most of the benefits from federal tax cut” (March 7):
The national debate about tax reform was loud and prolonged. Both sides wanted the same outcome but – as is so often the case – disagreed about how to get there. I think both sides wanted lower taxes for low-income people, while improving the competitiveness of our businesses for the long term. The two goals are not at odds with each other.
In fact, now that the federal plan is in effect, we are seeing benefits across the board. A schoolteacher in my district is getting another $62 in her biweekly paycheck. That’s because the federal income tax withholding in her paycheck has dropped. With 26 paychecks a year, it is making a real difference in her household. Nobody I know would turn down an extra $1,612 per year. She is not alone – almost every employee in Maine is taking home at least an extra $20 to $40 per week.
It’s not only schoolteachers. The new federal tax code also made U.S.-based businesses much more competitive, dropping us from among the highest taxed in the world to the middle of the pack. That has improved operating income for all kinds of companies, especially manufacturers. Companies are using those proceeds to raise wages, increase 401(k) matches and, yes, invest in themselves. And that’s what they should be doing.
Consider these two scenarios:
A Maine business takes the extra cash they have from tax reform and pays a one-time bonus. None of it is dedicated to a rainy day fund or for growth. Then, they go out of business in five years because they didn’t reinvest.
Is that good for the employees?
Another Maine business buys a new CNC routing table, invests in research and development, increases equity for a rainy day by buying back some stock, and still pays a small bonus.
What’s better for the people who work there? After all, the employees make the growth of the company possible with their passion, dedication and ingenuity. They want a successful, growing company they can take pride in, one that will be around for the long term, where they can grow a career and fund a healthy retirement.
People say, “These tax cuts – all they are is good for business.” But on both sides of the aisle, we want the jobless to have job opportunities; the low-income to have a chance to become high-income; and high-income earners to stay here and give back. To do that, we need companies that reinvest in their growth and success for the long term.
Let’s promote positive tax policy in a bipartisan manner to strengthen Maine companies so Mainers can grow careers, not just jobs.
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