In 1989, my mother and I started a business out of my garage. We raised money to get started, worked hard, and developed an office chair based on my dad’s expertise in ergonomics. Two years later, as our business was gaining steam, we discovered an unwelcome surprise. We owed an additional $86,000 in taxes on top of what we had already paid because the tax code was too complex and rigged against small businesses.
Today, Neutral Posture continues to thrive and create jobs in our community. We employ 150 workers, including 90 at our headquarters in Bryan, Texas, and another 60 across the U.S., Canada, and Puerto Rico.
But until recently, the tax code was holding Neutral Posture back from further growth, and for a small manufacturer like us, it was clear it was broken for decades. American job creators were due for a complete overhaul. The outdated, complex tax code and its sky-high rates needed to move aside in order to allow our company — and others of all sizes across the country — to keep growing by creating even more jobs and investing more in our hardworking employees.
After years of falling behind, Washington got serious about strengthening the American economy and enacted a tax plan in 2017 that levels the playing field for American businesses by encouraging investments and job creation in the U.S.
Comprehensive tax reform, the Tax Cuts and Jobs Act, cut tax rates for American families at all income levels and for job creators of all sizes. The tax code is far simpler than before, saving everybody time and money on Tax Day. The economy is also stronger than before because Americans are choosing how to spend their hard-earned money, whether it’s on a bucket list vacation or starting their own business. Lower taxes and less government have ignited a new era of American prosperity.
Provisions such as lowering taxes for small business owners, allowing all businesses to fully and immediately write-off the purchase of new equipment, and cutting the corporate rate from 35 percent to 21 percent were all sorely needed updates that are now driving a new wave of business investment.
As with many businesses in the U.S., Neutral Posture used our tax cut savings to raise wages, hire more workers, expand our product line, and make needed investments into our business and community. We have a new joint venture that will generate new sales for our company, which was partially funded with these savings.
Neutral Posture is organized as an S corporation, which means our tax rate was far higher than the 35 percent corporate rate. Prior to tax reform, many businesses like ours were paying taxes at a rate of 44.6 percent or more. S corporations are designed to encourage the formation and growth of family businesses and to create jobs in the local community, and ever-raising tax rates were beginning to impede our basic functions.
Now, small businesses are stronger than ever. The 2017 tax law lowered rates for S corporations, many of which are small businesses. With more money to spend — and sending less to Washington — small businesses hired at the highest level in 45 years. There are also more job opportunities and higher paychecks for millions of American families.
Allowing American producers to write-off capital investments more quickly is also helping Neutral Posture and thousands of other manufacturers just like us. Prior to tax reform, job creators faced complex depreciation rules after purchasing new equipment. Figuring out this maze of rules took away capital and time resources that could have been spent on paychecks or retirement contributions. Not anymore. We are finally out of the maze of confusing depreciation schedules and are using tax reform savings to hire more workers and purchase new equipment to make the job easier.
Tax cuts and a tax code written for the 21st century economy are improving the lives of America’s hardest workers and fueling a new era of economic growth, for Neutral Posture and countless more U.S. job creators. This growth would not have been possible under the old, broken tax code. Instead of discussing ways to hike tax rates and roll back these many benefits, Congress must keep America on a pro-growth track.
Boenigk is chairman and CEO of Neutral Posture, a women-owned family business in Bryan, Texas.