As a businessman, I believe deeply in the power of free markets. Yet I also know that government investment plays a vital role in seeding those markets for success.
Our economy can’t prosper without a strong and vibrant business sector, but our businesses need smart, efficient tax policies to help them thrive. Our businesses need tax policies that have a direct effect on economic growth rather than derivative, trickle-down approaches.
My company helps manufacturers and other businesses become more energy efficient. These investments lower operating costs and increase a business’s competitiveness for the long haul. Energy efficiency is just smart business.
Our business is thriving. One of the elements in our success is a government program called the EPAct tax deduction or 179(d). This program represents a successful partnership between the public and private sectors in which government investment, through tax deductions, helps businesses invest in infrastructure, which helps them become more efficient and competitive, all while reducing our dependence on dirty sources of energy.
Like most Americans, I have heard a steady stream of claims from politicians pandering to voters that all we need to do is lower our taxes so our businesses can be more competitive in global markets and we can create more jobs. As a businessman, I know there are more efficient ways to use tax policy to stimulate this economy. And I know that it makes no sense to pursue tax breaks we don’t need and pay for them by cutting programs that actually do strengthen our economy and job creation.
I believe continuing the Bush-era tax cuts for the richest 2 percent of Americans delivers a lot less bang for the buck than investing that same pool of money in energy efficiency programs like EPAct.
No business owners create jobs simply because they get a tax cut. We all create jobs when we see sustained customer demand for what we have to sell. So let’s get busy creating some demand for things that will make our economy truly more competitive.
The United States trails many of our major competitors – including Germany, the United Kingdom, France, Japan and China – in energy efficiency, according to a new survey by the American Council for an Energy-Efficient Economy. U.S. manufacturers spend more for energy per dollar of goods produced than three-quarters of our competitor nations.
That’s not smart business.
There are better policies to stimulate job growth. A million dollars spent on utility bills sustains 10 jobs in the community, but that same million dollars invested in energy efficiency sustains 17 jobs over the long term. Half of all energy and resource efficiency jobs are held by workers with high school diplomas or less, and these jobs pay an average $4,900 more than the national median wage, according to the ACEEE study.
Am I afraid that if I succeed, I will be paying a higher rate on my income taxes? Absolutely not. Like most entrepreneurs, my drive to solve a problem and bring products to market overwhelms any concern I might have with the amount of personal taxes I might have to pay now and in the future.
When you look at the true effects of these tax policies on small businesses and the proportionality of impact, you realize that the majority of business owners plow most of their earnings back into growing their businesses, rather than taking out taxable profits. This is one of the reasons that less than 3 percent of small business owners would even pay a dime more if Congress allowed the high-end Bush tax cuts to expire at the end of the year.
What I really fear is that blindly continuing policies like those tax cuts for high-income taxpayers would increase the pressure to cut successful programs like EPAct and those policies that support energy efficiency investments and modernize our infrastructure. That would make our economy less competitive and hurt small businesses like mine.
Jason Massey is CEO of Sustainable Industrial Solutions, located in Durham.