Even with the election long over, the Trump administration continues to be the focus of near constant news coverage due to heated debate over the president’s social and immigration policies. While his economic proposals have seen less coverage, you need to be prepared for how they will impact your business.
Democrats have raised concerns that the proposal gives private companies too much control, while some Republicans have expressed concerns over the costs in relation to the country’s current debt. However, both parties largely agree in principle, and their leadership has expressed a desire to reach a compromise.
The plan is expected to create a huge economic boost not only for the selected contractors but also subcontractors, suppliers and support businesses. Additionally, the expected economic growth should create opportunities for other businesses to sell products and services to the increased labor force.
For similar reasons, President Trump has proposed steep tariffs on imports from China, Mexico and other countries that he believes have undercut American manufacturers. His goal is to incentivize manufacturing in America rather than abroad.
While this may help some businesses, others rely on low-cost foreign manufacturers to stay profitable. Congressional leaders from both parties also fear retaliatory tariffs against American exports by other countries and reduced opportunities for American businesses.
Without full support from Congressional Republicans, it is unlikely that the president will be able to implement his full agenda on international trade.
Republicans have blamed the law for the rising costs, while Democrats argue that costs would have risen even faster without the law. Originally, Republicans planned to simply repeal the law and leave any reform to the states, but voters on both sides of the aisle disapproved of this plan.
Details of the proposed replacement have not been released, but it will likely include measures Republicans think will lower costs, including opening health insurance competition across state lines. After President Trump’s executive order directing the IRS to not enforce the penalty for the individual mandate
, it’s also likely the proposed law will reduce penalties on businesses that do not provide health insurance for their employees.
The 15 percent tax rate is intended to encourage reinvestment and to encourage businesses to move to America to escape higher taxes elsewhere. While Democrats and some Republicans say that the tax cut will reduce tax revenues by more than the country can afford, it’s almost certain that the Republican-controlled Congress will cut business taxes to some degree.
Leaders on both sides of the aisle agree that reducing tax rates will require scaling back or eliminating tax deductions. The business interest deduction is one of the largest deductions that may be cut.
Currently, business owners can deduct interest on their business debts, including small business loans
, to reduce their income taxes. Various proposals would eliminate the deduction entirely, have it apply only to certain businesses or eliminate it only for loans issued after the tax changes take effect.
With the election of President Trump and a Republican Congress, the Fight for $15
push for a federal minimum wage increase, which is backed largely by Democrats, is certainly stalled. While this gives some relief to business owners who feared being unable to afford higher labor costs, many state and local governments continue to go forward with their own minimum wage increases.
In addition to direct expenses, business owners must spend time and money ensuring that they are aware of all applicable regulations. In theory, a reduction in the number of regulations will reduce the cost of doing business.
The downside is that business owners don’t know whether cuts in regulations will apply to them or when they will happen. Additionally, reductions in regulations could introduce new competition from other states or countries. Another potential consequence is profit-harming price wars if regulations that previously pushed costs up are removed.
Planning for Uncertainty
With so much uncertainty, the most important thing to do is to stay prepared. Part of this is continuing to monitor the administration’s proposals as they move through Congress to see what has a likelihood of passing. If you predict your business may be impacted, consider boosting your cash reserves
so you have the capital to get you through a rainy day or help you take advantage of new opportunities.
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