by Phil Yacuboski
Many businesses are praising the new GOP tax bill, saying it will cut taxes and allow businesses and corporations to invest and hire workers.
“It’s a big victory,” said David N. Taylor, president and CEO of the Pennsylvania Manufacturer’s Association, who said the bill is especially good for manufacturing. “Getting the corporate rate to 21 percent, which is right below the average of our closest competitors, is great news. It give us a slight advantage.”
He said one of the biggest advantages will be global versus territorial taxation, which won’t penalize corporations from bringing back overseas profits and investing that money here in the U.S.
“As a result, you have an enormous amount of corporate earnings that can’t come home,” he said. “You’re talking about maybe two trillion dollars of profits that can be reinvested in America. This will be a real private-sector stimulus.”
The bill also expands full-expensing of equipment and allows them to deduct the cost of investment immediately, rather than wait for items to depreciate.
“That’s what enables the purchase to be made in the first place,” he said. “This will really spur investment and to buy new gear to expand investment.”
Taylor said it will likely create more competitiveness between the states to make them more business friendly.
“Will North Carolina, Texas and Indiana see a bigger bump because their fundamentals are better? Probably. But this at least gives us a fighting chance,” he said. “This is what we needed Washington to do.”
For the oil and gas industry, passage of the tax plan is welcome news.
“Proposals to lower the corporate tax rate and strengthen cost-recovery provisions can allow the oil and natural gas industry to continue investing billions of dollars in the U.S. economy and add to the 10 million U.S. jobs our industry currently supports,” said Jack Gerard, CEO of the American Petroleum Institute.
The Marcellus shale industry has been operating in Pennsylvania for about ten years. According to the U.S. Energy Information Administration and their December Drilling Productivity Report, Pennsylvania’s natural gas production has reached 15 billion cubic feet per day. The number is a 25 percent increase over the previous year and an increase of 80 percent since January 2013.
“These reforms can also drive innovations in new technologies to protect the environment and keep energy costs low for consumers,” he said.
Nineteen percent of U.S. natural gas production comes from Pennsylvania.
While it’s a comparatively small industry in Pennsylvania compared to natural gas, wind farms will likely see a bump from the tax bill.
“We are grateful to our champions in Congress for their work to craft a pro-business tax reform bill that will continue the success story of American wind power,” said Tom Kiernan, CEO of the American Wind Energy Association.
Pennsylvania has 27 wind manufacturing sites, including several in the northeast. It is estimated that the wind power it manufactures, powers more than 300,000 homes. The industry also supports about 2,000 jobs.
The Mehoopany Wind Farm in Wyoming is the state’s largest, with 88 wind turbines. The Bear Creek Wind Farm in Luzerne County has 12; a wind farm in Waymart has 43, according to information compiled by the Saint Francis University Institute for Energy.
“The bill respects the 2015 bipartisan phase-out, preserving through 2019 the Production Tax Credit and Investment Tax Credit, which the wind industry uses to access capital and invest in U.S. infrastructure,” he said.