Southwest Washington Congresswoman Jaime Herrera Beutler was in Longview Tuesday to assess the early effects of the new tax law signed by President Donald Trump in December.
The fourth-term Republican visited Northwest Motor Services in Longview, a local business that has flourished under the leadership of President Spencer Wiggins since he acquired the company five years ago.
As a member of Herrera Beutler’s local economic advisory council, Wiggins said he invited the congresswoman to tour the company’s new $3.8 million, 40,000-square-foot building on Baltimore Street after receiving an email from her office earlier this month. The building went up last spring and has been in the planning stages for at least two years.
“The fact that there’s finally growth is a good thing,” Herrera Beutler remarked following the tour. “I still remember the desperation of people looking for work when I first came into this job” in 2011.
Although Northwest Motor Services doesn’t share overall figures, Wiggins told The Daily News that the company’s revenue has quadrupled since he took the helm in 2013. The mechanical repair and sales company did business in 27 states last year, with projects ranging from $500 to $1 million, he said. Northwest Motor Services has also expanded to 33 employees, 25 more than when he bought the company.
While the economy grew at a 2.3 percent clip in 2017, Herrera Beutler said her party’s tax plan will unleash even more growth. Estimates of the tax law’s economic impact vary, with analyses projecting growth rate increases ranging from 0.06 to 0.09 percent per year over the next decade.
Wiggins said it’s still too early to gauge the plan’s impact on his business, but he said he was impressed to see that KapStone Paper and Packaging recently report a $144 million increase in corporate profits as a direct result of the new tax law. Northwest Motor Services has important clients in the pulp and paper industry, he said.
“I don’t know that we’re seeing anything yet that we can really tie back to (the new law), but knowing that customers are healthy is encouraging and it’s making us bullish on our outlook,” Wiggins said on the tour.
The company’s rosy economic view also prompted recent pay raises for employees.
While the raises came after the new tax law was enacted, Wiggins said they were not due to a new tax windfall. An entry-level apprentice at Northwest Motor Services starts at about $14 per hour, while senior employees often make six figures, he said.
The law “was sort of a driver, but if we’re optimistic we want to make sure we’re taking good care of our employees,” Wiggins told The Daily News. “We’ve got a great group of people here, so it’s just important to us to help them remember they’re the ones who really get stuff done around here.”
Only 26 percent of the public approved of the tax bill directly after it was passed, largely because it will save the wealthy far more than middle- and low-income taxpayers, according to a December Quinnipiac poll. But now nearly 40 percent of people approve of the legislation compared to 47 percent who disapprove, according to a poll conducted earlier this month.
“People are starting to see the difference in their paycheck,” Herrera Beutler said. “The proof is going to be in the pudding with this.”
This month, Herrera Beutler also sponsored legislation to make the individual tax cuts permanent. (Corporate tax cuts in the law are permanent, but most individual cuts will sunset after 10 years.)
The median family in Cowlitz earns about $47,400 per year, according to the state Employment Security Department. The non-partisan Joint Committee on Taxation estimates a single person with no dependents earning between $40,000 and $50,000 could see a tax cut of roughly $1,300 next year under the new legislation. Meanwhile, a married couple filing jointly with the same income can expect about $900 in tax savings. But by 2027, the plan would actually increase taxes for the average taxpayer in that income bracket, the committee estimates.
When asked how the individual tax cut bill would be paid for, Herrera Beutler said the cuts would also be paid for through more growth.
“What’s most important to me is that people get to keep more of their money,” she said. “It’s not like the money is exiting the economy, it’s just going to be controlled by the consumer rather than the government.”
The bill has not yet been scored by the Congressional Budget Office, Congress’s official non-partisan scorekeeper.
However, many economists believe stimulating the economy at a time of relatively strong growth is a bad idea, noting the tax cuts could haunt policymakers in the long run.
“The long-term damage from increased deficit spending will reduce our ability to invest,” said Andy Nicholas, associate director of fiscal policy for the left-leaning Washington State Budget and Policy Center.
Nicholas said that the notion that tax cuts will pay for themselves has been examined many times and has never been borne out through data.
Due to a tight labor market and low unemployment, Nicholas said many businesses were already planning to raise wages.
“What really drives wages is the labor market and the demand for employees,” he said. “Any individual business is an anecdote.”
Nevertheless, Herrera Beutler said she’s proud of her vote for the tax law and won’t shy away from it in this year’s re-election campaign.
“Getting to support and pass the tax bill was definitely a defining moment for me in terms of my entire career in Congress,” she said. “If that’s one of the biggest accomplishments I’m ever a part of, it was worth it.”
Correction: This story has been updated to accurately reflect projected tax savings for the average Cowlitz County household under the new federal tax law.