Hawaii small businesses have big plans for tax savings
HONOLULU (HawaiiNewsNow) - Royal Hawaiian Heritage Jewelry has been in business for about 40 years.
And owner Jackie Breeden is hoping a sweeping tax overhaul approved by Congress and headed to the president's desk will help her expand operations beyond her stores at Pearlridge Center and on Bishop Street, and a single neighbor island outlet in Kona..
"I'm from Kauai so I would like to open up a shop back on the island of Kauai and on the west side of Honolulu as well, and be back in Maui. Before we were on all the islands," she said.
Under the tax reform measure, 20 percent of a small company's yearly earnings will be tax-free. Supporters of the change insist companies could raise wages or offer bonuses.
But University of Hawaii economist and UHERO chairman Carl Bonham believes few small businesses in Hawaii will be flush with cash.
"From the estimates I've seen, unless you're in the top 20 percent of the income tax brackets, maybe the top 40, the amount of savings from that 20 percent deduction is going to be very, very small," he said.
Hawaii has more than 122,000 small businesses. They average fewer than 10 employees and less than a million dollars a year in annual revenue.
NFIB Hawaii's Melissa Pavlicek said owners should be optimistic about tax savings but also realistic .
"I think the fine detail over what businesses will pay has not been sorted out yet and every business has to evaluate what did they gain," she said.
The tax cut is supposed to enable small businesses to hire more workers.
Bonham warns Hawaii's low unemployment makes that difficult.
"Business A is going to try and hire the workers next door at Business B and drive up wages. That's a good thing for a little while, but it starts to cause inflation," he said.
Breeden hasn't run the numbers yet but she's sure whatever she saves in taxes will help to grow her company..
"I'm very optimistic. Yes!" she said.
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