Election Day 2020 is quickly approaching. Whether you’ve already voted or you plan to head to the polls on November 3rd, it’s good to think about how the outcome of the presidential election might affect your business. Luckily, both candidates have plenty of policy proposals that give us a hint about how the next four years might unfold for U.S. businesses.
Small Business Plans
There’s never been a more challenging time for small businesses in the U.S. Despite employing 50% of American workers, closures and economic challenges have disproportionately affected these businesses. The COVID-19 pandemic temporarily closed 43% of businesses, and small business employment has fallen by 40%. At the end of March, 38% of small businesses thought it unlikely that they would still be in business at the end of 2020. While positive outlook increased with the passage of the CARES Act, experts still estimate that one in six small businesses will permanently close. The two presidential candidates’ plans can dramatically affect small businesses’ economic landscape in the short and long-term future.
- Joe Biden
Former Vice President Joe Biden plans to first focus on getting the Coronavirus under control, attempting to improve all Americans’ outlook as soon as possible. His proposals also include:
- Grants, rather than loans, for small businesses that have lost substantial revenue;
- Tax relief for businesses with fewer than 50 employees and technical and legal assistance to ensure businesses aren’t shut out of relief programs;
- Redirecting unused funds originally targeting large corporations and unused PPP funds to help small businesses;
- $50 billion in public and private venture capital funds to assist entrepreneurs in disadvantaged areas through state, local, tribal, and nonprofit funding initiatives;
- Establishing a $400 billion federal procurement program to “Buy American” and give greater federal contracting opportunities to certified small and disadvantaged small businesses; and
- Setting up a national network of business incubators to help nurture startup businesses.
- Donald Trump
The President’s proposals for small businesses over the next four years begin with much-needed Coronavirus relief. His proposals also include:
- Reopening the Paycheck Protection Act with $135 billion in forgivable loans and assistance;
- Making the payroll tax reduction permanent and forgiving the reductions already made;
- Increasing tax cuts, trade relief, and regulatory relief for small businesses;
- Promoting more minority-owned businesses through Community Development Financial Institutions, including using major financial institutions to encourage new lending in Black communities; and
- Making the Minority Business Development Agency a permanent federal office to increase federal contracting opportunities for minority-owned businesses.
Both candidates’ economic policy plans emphasize America’s place in the global economy, although they differ in implementation and priorities for the U.S. economy.
- Joe Biden
The former vice-president’s plans for spurring economic growth and leading in the global economy revolve around substantial tax increases and other measures. Some of his business-related proposals include:
- Increasing the corporate tax rate to 28%, the half-way point between the 21% established by the Tax Cut and Jobs Act (TCJA), and the 35% in place before the TCJA;
- Implementing a ten-year $1.3 trillion infrastructure package to spur job growth, support clean energy research, modernize schools, repair roads and highway infrastructure, transit projects, and implementing rural broadband;
- Impose a 15% minimum tax on book income of large companies;
- Increase the tax rate on foreign subsidiaries of U.S. companies to 21%.
- Donald Trump
While the Trump campaign hasn’t released a great deal of detail about their specific plans for economic policy in the years to come, some business-related plans include:
- Making the cuts from the TCJA, set to expire in 2025, permanent, repealing renewable energy tax credits, creating a tax credit for private school scholarships, and expanding the IRS budget by $15 billion over ten years;
- Making deep health care spending cuts and decreases to prescription drug prices, although cuts to healthcare spending may increase the health care costs paid by businesses and individuals;
- Keeping “America first” in trade negotiations, penalizing countries with a high trade deficit with the U.S. and those that unfairly tax American companies;
- Creating tax credits for companies bringing jobs back to the U.S.;
- Spurring job creation through a $2 trillion infrastructure spending bill;
- Continuing the “Buy American, Hire American” immigration agenda.
Despite all the policy proposals, what businesses want most from either candidate as President is stability. Policy whiplash and constantly changing rules don’t give businesses the predictable structure they need to plan and grow. We can only hope that whoever becomes President on January 20, 2021, keeps that in mind. In the meantime, if you’re concerned about how new business and tax policies will affect your business, give us a call or contact us. We are always available to review any business concerns you may have.