Bailey Coach: Wolf's tax, wage proposals would be 'devastating' to industry
The owner of Bailey Coach in Spring Grove told the state House Majority Policy Committee on Wednesday that his transportation business might not survive if Gov. Tom Wolf's minimum wage and income tax proposals are implemented.
John Bailey, who also started a niche disinfecting service last year, said small businesses, including many family-owned transportation companies, can't afford to pay higher wages and personal income taxes right now.
"This would just be devastating to our industry," he said.
Bailey's testimony was part of a Republican committee hearing on the potential impact of Wolf's budget proposal on businesses in Pennsylvania.
Under Wolf’s plan, Pennsylvania’s flat income tax rate would rise from 3.07% to 4.49%, but the threshold for tax forgiveness would also increase. That would rise to $15,000 for single filers from $6,500 currently, and to $10,000 for each dependent from $9,500 currently. So the exemption for a family of four would go to $50,000 from $32,000 currently, meaning that households of four earning less than $50,000 would not pay state income tax.
A household of four earning above $50,000, but below $84,000, would see a tax cut, and overall, two-thirds of income-tax payers would pay less or the same, administration officials said.
The governor's plan would also increase the minimum wage to $12 an hour to start, while moving incrementally toward the goal of $15 an hour.
Wolf has said the tax proposals would be more equitable and would increase funding for public education.
The budget proposal would also cut the corporate tax rate from 9.99% to 5.99% over five years starting Jan. 1, 2022.
But Republican lawmakers have panned Wolf's budget, saying it's "tone deaf" at a time when small businesses and tax payers are struggling because of the economic impact of COVID-19.
Business owners and industry representatives said much the same at Wednesday's hearing, with restaurant owners saying that if the minimum wage goes up to $15 an hour, most of the server jobs will be automated and customers will order their food from a tablet attached to their table.
Another point that was brought up several times in the hearing was that many small business are registered as S corporations, which are taxed based on the owner's personal income and would be subject to the increased personal income tax rate, not the decreased corporate tax rate.
Bailey said most transportation companies in Pennsylvania are family-owned S corporations.
State Rep. Dawn Keefer, of Franklin Township, said at the hearing Wednesday that Wolf was disconnected from the reality of what business owners are dealing with.
"I don’t believe that he truly understands how the rubber hits the road with these different policies and how they’re actually impacting businesses," she said.
Last March when the pandemic first hit, Bailey said, he laid off 58 of his 60 employees with the promise that he would pay for their health care costs until he could bring them back to work.
One year later, Bailey is running a second company, Bailey's Zero Hazard, offering disinfecting services to other businesses by leveraging the equipment his company already used to sanitize charter buses and other passenger vehicles.
At the start of the pandemic, Bailey's company also sanitized ambulances and other first responder vehicles at no charge.
The new business has been a success so far and allowed Bailey to bring back 30 employees, he said.
But if the minimum wage is increased to $15 an hour, and the personal income tax jumps to 4.49%, Bailey said it would be much more difficult to cover those costs.
"I realize COVID is nobody’s fault, but this is the time where we can’t really incur any additional expenses to our businesses," he said.