On January 20th, a new chapter in American and world history begins as Donald Trump is sworn in as our 45th President. During a hotly contested and contentious campaign, issues and platforms were bandied about. Now, a new administration, led by a businessman rather than career politician, is expected to make significant changes, from taxes and immigration to healthcare and education.
For small businesses like our own, how will these changes affect us? Based on President-Elect Trump’s proposed policies, there appears
to be a host of topics that could influence small businesses across
One position Trump has taken that has nearly every business owner supporting is the slashing of the corporate income tax rate from a high of 35 percent to 15 percent.
“No business of any size, from a Fortune 500 to a mom and pop shop to a freelancer living job to job, will pay more than 15 percent of their business income in taxes,” reads Trump’s policy paper on the issue.
Whether this 15 percent is simply a starting point or a hard number, the tax law can’t be changed without Congress, which has had trouble agreeing on tax reform in the past. But the National Federation of Independent Business believes that a Republican president and Congress will be able to lower taxes for small companies.
2. Regulation/Less government
Trump has said he’ll reverse some of Obama’s executive orders, including one that eased deportation policies against minors who are in the U.S. illegally. He’s also said he’d eliminate a rule that allows the Environmental Protection Agency to regulate bodies of water on private lands. And he has vowed to withdraw the United States from an international agreement on climate change.
He would like to return much of the federal government’s control back to individual states, allowing them to make decisions for their citizens at a more local level.
Governmental regulations and bureaucracy has long been a concern for small business groups which have been caught up in federal, state and local requirements that have hindered their companies and profits.
3. Trade Agreements
Trump campaigned on renegotiating the North American Free Trade Agreement, which governs trade among the U.S., Canada and Mexico, and wants other trade deals modified. He also wants the U.S. to withdraw from the Trans-Pacific Partnership, which is awaiting approval from Congress. But he may face opposition from small business groups.
“NAFTA has been a plus for small business trade. Free trade accords reduce expenses and expand opportunities for small businesses,” says Raymond Keating, chief economist with the Small Business & Entrepreneurship Council.
More recently, Trump has threatened a 35% tariff on U.S. companies who produce products overseas which is getting a great deal of attention. World trade partners, U.S. companies and investors alike, are all concerned about how this could affect them.
4. Federal Minimum Wage
While President-Elect Trump has wavered on both sides of the federal minimum wage debate, his nomination of Andrew F. Puzder, chief executive of the company that franchises the fast-food outlets Hardee’s and Carl’s Jr. to be secretary of labor, teeters to one side. Puzder has been a critic of the Obama administration’s mandated overtime rule (since put on hold) and believes that significant minimum wage increases would hurt small businesses, thus leading to job losses.
However, the approval of minimum wage increases in Arizona, Colorado, Maine and the state of Washington could add momentum to other states and eventually on a federal level, says Holly Sklar, director of the advocacy group Business For a Fair Minimum Wage.
While some small business groups agree that a higher minimum wage hurts small companies, others say it helps them compete and gives consumers more money to spend at small businesses.
With the federal minimum wage at $7.25 since 2009, most expect at least an incremental increase with the new administration.
At the very least, both sides of the aisle agree that Obamacare needs some fine tuning in order to be affordable and survive long term—but to what degree are these adjustments? Trump had promised to repeal and replace the Affordable Care Act but may now be looking at making modifications rather than a wholesale repeal. The dramatic rise in 2017 of health insurance premiums set off another reminder to many businesses on Main Street that they simply cannot afford to maintain this rate of increase to survive.
The political and economic landscape of this country is about to change under President-Elect Trump’s administration. While these issues may impact you internally and how you conduct business, most importantly, the key will be what affect it will have on your customers—positively and negatively. Regardless of our political persuasion, we’ll be anxiously awaiting to see exactly what that change will be and how it will affect our businesses and lives.