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May 4—NEWTON TWP. — Proposed state and federal tax hikes could make it impossible for farmers like Keith Eckel to pass down his family's business to the next generation.
During a roundtable discussion with small business owners Monday afternoon at Eckel's Abingtons farm, Pennsylvania Treasurer Stacy Garrity, noted Gov. Tom Wolf proposed the largest personal income tax increase — 46.3% — in state history.
President Joe Biden is also eyeing tax hikes for capital gains upwards of 43.4%, she added. That, combined with tax rates in Pennsylvania, means some people would have to endure a 46.5% combined capital gains tax rate, Garrity said.
Eckel, a fourth-generation farmer, talked about the stress those tax increases would put on family-owned farms.
"The vast majority of farmers don't have cash," he said. "Their money is in land, equipment and livestock. If estate taxes are raised, they have to choose what to sell in order to pay the bill. And, if you sell the sources of your production, you're no longer capable of making a profit and are forced out of business."
Eckel added the proposed tax hikes are unprecedented and put additional pressure on business owners.
"This isn't a partisan issue," he said. "In 15 years as farm bureau president, I never worried about whether a Democrat or Republican was president or in the legislature. We always worked to lower the burden, not increase it."
Garrity, who spent 34 years in manufacturing at Global Tungsten & Powders in Towanda prior to starting her political career, believes the proposal would be detrimental to businesses.
"It would burden us with $3 trillion in tax hikes, lower wages and shrink the country's economy," she said. "I'm an advocate for small business because of my background and it's an expense future generations should not have to pay and one small businesses can't afford."
Tom Hill, owner of State Street Grill in Clarks Summit, said his business hasn't fully recovered from state-mandated shutdowns last year and the added taxes would compound the problem.
"We're still down 35%," he said. "I felt our industry got targeted a little bit with some of the restrictions forced upon us. For them to take it to the next step and next step ... it definitely felt intentional and it did a number on us."
Robert Bresnahan Jr., CEO of Kuharchik Construction, a third-generation family business based in Exeter, believes finding skilled labor is going to be a major crisis moving forward. The uncertainly regarding taxes makes planning difficult, he added.
"You can go buy a shiny new piece of equipment, but if you don't have anyone to operate it, there is no point in having it," he said. "You don't know what kind of moves you need to make preemptively, because you don't know what to expect."
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