Impact Of GOP Tax Reform

How will SC businesses react?

December 11, 2017 - 10:48 am

DECEMBER 11, 2017 BY RENEE SEXTON (South Carolina Radio Network)

Although the focus Friday at the University of South Carolina Economic Outlook Conference was on the state’s economy, researchers addressed the potential impact of U.S. House and Senate Republicans’ tax reform plan on the state.

Darla Moore School of Business economic researcher Joseph Von Nessen said, if the bill passes and the corporate tax rate is lowered, companies have several options with the savings. Among them, invest in employees or invest in infrastructure or technology.

“They can expand their employment base so invest in hiring more workers, making more efforts to expand the total size of their employment,” Von Nessen said. “(Or) they can invest in another set of activities, including research and development, capital investment, technology investment, things like AI, robotics, automation. And all of these things would make these companies more competitive and raise productivity, which would be a positive for the U.S. economy.”

Von Nessen said since the employment market is strong in South Carolina, he does not expect companies in the state to expand workforce. He said qualified employees are already in high demand and companies will not bother to create positions if there is nobody to fill the jobs.

South Carolina’s unemployment rate is 3.9 percent.

“The downside there is if resources are spent rather on unproductive speculative activity, obviously that’s going to have less of a positive effect,” he said. “Productivity growth has been one of the weak spots in this expansion, as had private investment, so that would be a net gain for the U.S. economy and for South Carolina.”

Von Nessen also said the plan could help small businesses spur additional growth from productivity.

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