When trying to predict what the tax landscape could look like in a Trump or Harris presidency, we have to look back. What have they historically supported, and what kind of environment will they be operating in?
Here are some initial thoughts on what small business owners could expect in each scenario.
Continuation of TCJA Policies: A Trump presidency might focus on extending the Tax Cuts and Jobs Act (TCJA) provisions, such as the reduced corporate tax rate and the 20% Qualified Business Income deduction for pass-through entities. These provisions have provided significant tax relief to small businesses.
Emphasis on Deregulation: Historically, Trump's policies have included reducing regulatory burdens, which can ease compliance costs and operational hurdles for small businesses.
Tax Simplification Efforts: There may be attempts to further simplify the tax code, potentially making compliance more straightforward for small business owners.
Incentives for Investment and Growth: Tax incentives aimed at encouraging investments in infrastructure, equipment, and technology could be proposed, facilitating business expansion and innovation.
Potential for Increased Tax Rates: As part of the Democratic platform, there might be proposals to increase taxes on higher-income individuals and corporations to fund social programs. This could indirectly impact small business owners, especially those whose personal and business incomes are closely linked.
Focus on Equity and Support Programs: Policies might focus on supporting small businesses through grants, loans, and targeted tax credits, especially aimed at minority-owned and underserved businesses.
Enhanced Compliance and Reporting Requirements: There could be increased scrutiny on tax compliance and efforts to close loopholes, potentially increasing the administrative burden on small businesses.
Investment in Green Initiatives: Tax incentives for businesses adopting green technologies and practices may be introduced, providing opportunities for small businesses to benefit from eco-friendly investments.
The bottom line is that business owners should be prepared and start planning for either scenario. A Trump presidency might focus on maintaining low tax rates and deregulatory measures, potentially favoring business growth and investment. In contrast, a Harris presidency could emphasize equity, social support mechanisms, and environmentally focused initiatives, possibly increasing tax rates but also providing new opportunities through specific credits and programs.
Small business owners should remain informed about policy developments and work with tax professionals to adapt their strategies in response to changes in the political and economic environment. This proactive approach will help them optimize their tax positions regardless of the ruling administration. When it comes to the TCJA expiration, in particular, there are steps we can help you take, today.