Here is an unbiased look at some major (and not so major) ways that Donald Trump’s policies could change how people run their small business.
OBAMACARE MAY END WITH OBAMA
Donald Trump has said, “Obamacare is a heat-seeking missile that will destroy jobs and small businesses; it will explode healthcare costs; and it will lead to healthcare that is far less innovative than it is today. Every argument that you’d make against socialism you can make against socialized healthcare, and any candidate who isn’t 100 percent committed to scrapping Obamacare is not someone America should elect president.”
His plan consists of repealing the Affordable Care Act (Obamacare), causing 21 million out of the 22 million covered to go uninsured. That’s almost doubling the amount of Americans without health insurance. Repealing Obamacare would also cost hundreds of billions of dollars from taxpayer money over the course of ten years.
However, he would also “block grant” Medicaid, and with aggressive enough savings goals, block granting medicaid could pay for the entire repeal (and then some). Here’s the definition of Block Grant according to the Federation of American Scientists:
“Block grants are a form of grant-in-aid that the federal government uses to provide state and local governments a specified amount of funding to assist them in addressing broad purposes, such as community development, social services, public health, or law enforcement.”
In the past, proposals of block granting have saved several hundreds of billions of dollars. So, what this means for small businesses is lower taxes due to not having to pay for the Affordable Care Act, and even though it will cost the government hundreds of billions to repeal Obamacare, the Block Granting of Medicaid will potentially cover over 100% of those hundreds of billions. (Source: Committee for a Responsible Federal Budget)
DON’T ASSUME REPUBLICAN = LOWER TAXES 100% OF THE TIME, BUT EXPECT A LOWER INCOME TAX
Republicans typically advocate for lower corporate and individual taxes, but Trump has been known, at times, to be slightly more progressive than his current party’s colleagues when it comes to this. For example, in our country’s more desperate economic times, Trump has proposed a one-time tax on the rich to help lower our national deficit. On the other hand, Trump was also a supporter of the 2003 Bush tax cuts and opposed a flat tax. What this tells us is that Trump will not ever lower taxes simply for the sake of lowering taxes.
Trump’s current tax plan calls for changing the tax brackets from 33%, 35%, and 39.5%, to 12%, 25%, and 33%, with a cap of 15% on business tax. This means that generally, you will pay less as a small business owner. However, if you or your business depend on government spending, such as technology, nonprofit organizations, or solar power and other clean energy companies, then you can expect harder times due to less federal capital.
NOT FREE TRADE, “FAIR” TRADE
Donald Trump, while he has taken advantage of certain free trade agreements (such as clothing manufacturing in China), vows to put various tariffs and quotas on imports and exports. His justification is that the only way for clothing companies to compete is to use overseas manufacturing plants, and for large companies, this is an unfortunate truth. He says that he knows how it works better than anyone, however, and that no one knows it better than him (“believe me”).
For example, he proposes a 35% import tax on Mexican products. He wants to use these policies to move businesses from China to the US as well. Trump frequently criticizes recent Trans-Pacific Partnership free trade agreement proposals. If your company depends on imports and exports, then you might be facing new duties and restrictions. However, if your company uses US products and services, you will benefit from the new policies.
NO ONE TO REPLACE IMMIGRANT JOBS
With Trump’s aggressive stance on immigration, small business owners who rely on immigrant labor will take a massive hit if he wins the election. Around 40% of Fortune 500 companies were started on immigrant labor or their children, including Apple. If you were a company with a large amount of resources, this wouldn’t be so bad. However, for small businesses around the country relying on the less expensive, higher-risk occupations, this could be devastating.
Unfortunately, even for those who don’t rely on government spending/immigrants/imports/exports, all of this is subject to change in time because of how much Trump’s opinions and priorities are changing throughout the race. If you think any of these possibilities could affect your business, talk to one of our professionals about preparing properly financially. You can find more information here.