Realities of the Taxmageddon Already Here

By July 31, 2012Taxation

Around the halls of Congress the fiscal cliff may be viewed as a distant problem, but for manufacturers it is an issue that they are dealing with right now, every day. They are seeing drastic reductions in their business and as a result, many have had to put off expansion plans and stop hiring. Because of this uncertainty, and the significant increase in their tax burden expected in January of 2013, Sandmeyer Steel, a Philadelphia manufacturer has instituted a hiring freeze.

Built from the ground up 60 years ago, Sandmeyer Steel Company has grown into a worldwide supplier of stainless steel plate products that help power and process industry companies around the globe.  Ron Sandmeyer’s grandfather moved to Philadelphia from Pittsburgh with know-how and an entrepreneur’s spirit, determined to go out on his own in the specialty steel industry. He built the company one order at a time, developed through personal contacts.  Six decades later, along with his brother, Ron leads a workforce of 125 employees that manufactures stainless steel plate products.

Ron’s company is the very definition of a supply chain manufacturer – Sandmeyer Steel relies on the growth of manufacturers both here and globally to sell their products – a classic example of a supply chain manufacturer. When a company decides to expand upon their existing facilities or build a new one, Sandmeyer Steel products are needed. And unfortunately, in an era of economic struggles and the uncertainty created by Washington, those opportunities are becoming increasingly scarce. This month has been their slowest month in over 2 years.

Ron explained, “We’re hoping for the best but planning for the worst. We’re only as successful as our customers – when they are struggling it has a big impact on us. When they aren’t able to invest because their taxes went up, it hurts our business.”

It’s critical that manufacturers have an environment in which they can flourish, and right now manufacturers like Ron Sandmeyer feel like they are under attack. The tax increases are going to have a devastating impact on the 66% of manufacturers who pay taxes at the individual rate, like Sandmeyer Steel and many of its customers. Simply put, these tax increases will fall squarely on the job creators in the United States, the ones we so desperately need to get our economy moving again.

“In a different environment, we would be hiring – our employees are our number one priority,” Ron commented. “We need to ensure that Washington understands that success should be our ultimate goal and that a huge tax hike only makes that goal much more difficult to achieve.”

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