How you look at it
Local tax professionals offer views on the new tax bill
John Curzon and Jeff Frable of CCK Strategies
Partisan bickering has made forming an opinion on Trump’s new tax bill difficult. So far, the record seems mixed.
In January, for instance, Walmart raised its minimum wage to $11 an hour and offered one-time bonuses of $1,000 to veteran employees. Supporters credited the bill. That same day Walmart announced it was closing 63 Sam’s Clubs throughout the country and cutting about 10,000 jobs. Opponents of the bill saw this as a clear sign of failure—higher wages don’t mean much to the unemployed.
Conservatives in Congress believe that high taxes and too much government regulation are the cause of America’s recent economic woes, but liberals and many economists believe automation and the mediocre education of the American workforce are to blame. It seems unlikely anyone will win this argument soon. To understand what the recent tax overhaul actually means for American businesses requires a dispassionate look at the numbers.
John Curzon and Jeff Frable are partners at downtown accounting firm CCK Strategies. The pair have had long friendship and have decades of experience with business in the state. Their firm has clients throughout Oklahoma and across the globe. Both are optimistic about the new tax law.
“We’re talking about one of the most major overhauls to the code since ‘86. So it’s a pretty big deal. My general feel is that most of the changes are positive, and we’re excited for the possibilities for our clients,” Frable said.
“Tulsa has a very strong manufacturing economy,” Curzon said. “That’s been related to the energy sector and the aerospace sector, as well. This tax law has a much more generous ability for companies to spend money on capital improvements for equipment. It’s gonna add growth to the U.S. as a whole. How much of that growth is going to land in Oklahoma is in part going to depend on how much we Oklahomans can attract business to our state.”
Kaitlyn Sharpe, a tax project manager at CCK, sees the tax bill in a somewhat different light.
“If I were to do a tax bill, I would increase our research and development tax credit to be comparable to the rest of the developed world so that we’re benefiting the most innovative companies—but that’s not what they did,” Sharpe said. “There are some software companies that might not even qualify for the reduced rates. I just don’t think benefiting manufacturing companies at the expense of other industries is smart policy, long term. I also work with the nonprofit Operation Aware of Oklahoma, Inc., and I’m curious to see what happens when people don’t itemize and there’s less incentive to give donations [because of the doubled standard deduction]. For a state that depends so much on local nonprofit involvement, that could be pretty harmful.
“My brother left the state, and he’s now working for CBS sports coding, and he can’t get a job here that’s comparable. I think that’s unfortunate—they all pay so much less in Tulsa because there’s not the value placed on coding here that there is in other places,” Sharpe added. “I’m worried that the jobs we economically value right now might not be around in fifteen years.”
But Curzon and Frable believe the economic leverage of the bill will outweigh its flaws.
“There’s a lot of press reaction to the corporate tax rate dropping from 35 to 21 percent, and that is very significant,” Curzon said. “But big corporations are owned by investors, and most of those investors are in 401(k) plans that the average American is a participant in. There should be a real benefit to everyone’s retirement plan because of this tax law. Mostly because the value of these corporations is going to increase simply because of lower tax cost.
“Also, a lot of Tulsa companies are more entrepreneurial. They are family businesses or entrepreneurs that are being taxed on their business income at their individual tax rate. These types of companies will see a real benefit as well.”
The best thing about this debate is that it will ultimately be resolved by numbers. The benefits of the tax bill will either outweigh the cost or they won’t. But in Oklahoma, the $800 million budget shortfall complicates this (and every) issue. The Center on Budget and Policy Priorities recently released a report that states the new tax law will force $5.8 trillion in program cuts over the next decade, including $1.8 trillion in cuts to Medicaid. Large healthcare cuts in Oklahoma on top of those the state has already experienced could have ripple effects that would only deepen the state’s education and opioid crises.