Small Business Bets: Will Trump Be Good for the Small Business Owner?
It’s official: as of January 20, 2017, Donald Trump is the 45th President of the United States, and if you believe Alec Baldwin’s prediction, Mike Pence will be the 46th in just a couple of months. All jokes aside, polls are showing that Trump has the lowest approval rating of any American president entering the oval office in modern history; it’s clear that Americans are worried about what to expect from a Trump presidency.
A demographic that doesn’t appear to be readily discouraged by the Trump administration however, is the small business owner. According to Reuters, small business borrowing rose after Trump was elected to office. What accounts for the spike in borrowing? Trump’s campaign promises. During his run for office, Trump “embraced a range of potential new policies, including tax cuts and infrastructure programs that boosters say will feed growth.”
It’s common for politicians, even outsiders like Donald Trump to make promises on the campaign trail that they have no intention of keeping. Trump himself said that he had forgotten about the promise he made to Carrier workers in Indiana, whose company was planning to move jobs to Mexico. How was he reminded? Here it is, in his own words: “And they had a gentleman, worker, great guy, handsome guy, he was on, and it was like he didn’t even know they were leaving. He said something to the effect, ‘No, we’re not leaving, because Donald Trump promised us that we’re not leaving.’ And I never thought I made that promise. Not with Carrier. I made it for everybody else. I didn’t make it really for Carrier.” Question: How can you make a promise to middle America factory workers, but exclude one of middle America’s factories? Trump goes on later to describe his original promise to Carrier workers as a euphemism.
To be fair, some jobs were saved at Carrier, but to save the jobs the company was offered a significant tax break, and it is unknown whether or not the workers’ will experience a pay cut. If large corporations are going to get hefty tax breaks to stay in the U.S., will small businesses have to make up for the loss? Can your small business afford a tax hike?
Trump’s tax plan for small businesses includes an income tax rate that would match the planned 15 percent corporate tax rate. But will he follow through with this? Given the billionaires he has nominated to fill the Trump administration’s cabinet posts, the love for small business might look to some like it’s waning.
Trump has said that a lower tax rate will be “available to all businesses, both big and small, that want to retain the profits within the business.” USA Today points out that the majority of small businesses work as “‘pass through’ entities—sole proprietors, partnerships, ‘S’ corporations, LLCs—which are not allowed to retain profits within the business. With this detail, it’s likely that only ‘C’ corporations—generally large corporations—will benefit.”
If you’re already having a hard time with finances, Trump’s trickle-down economic plan might not be able to help you. As a small business owner, it is your responsibility to keep the business moving forward. To keep from falling below the mark, it’s time to take a look at and adjust company finances. This means you might need to downsize and start looking for affordable business insurance from reputable companies that will put you first.
In reading this article, you might think the author has a bleak outlook about the new administration’s economic policies, but isn’t better to prepare than lose and regret? Your small business is important, treat it as such.