Tuesday, January 20th, 2009. That was the day when President Barack Obama, along with a Democrat-controlled Congress, declared war on the cornerstone of America—small business. A combination of increased taxes, expanded regulations, and the President’s namesake law, Obamacare, have crippled small business like never before. But now, for the first time in eight years, small business owners can breathe a sigh of relief with Donald Trump’s election as President. The President-elect has stated that he will decrease taxes, repeal and replace Obamacare, and decrease regulation. And, in doing so, small business will get the chance to recover and thrive under the incoming administration.
Small businesses are legal corporate entities with 100 employees or less. These are businesses that often are run by their founder, and only operate as corporations for tax purposes. If they are not formed as corporations, than the individual who owns the business must pay personal income taxes on every revenue dollar, as opposed to only their take-home pay. Don’t you just love all the ways the government concocts to milk people dry?
One of Donald Trump’s major goals as President will be to decrease taxes. It is important to note that small business are taxed in three main ways: the corporate income tax, capital gains tax, and the alternative minimum tax. The corporate income tax can range anywhere from 15-39 percent, depending on how much a business makes in a given year from day-to-day operations. Also remember that taxes are paid before the business can calculate its net profit, or what is left after it pays for operating expenses and employees’ salaries.
The capital gains tax is a tax on any asset of a small business that sells for more than its original value. Short-term assets (assets held for under 1 calendar year) are taxed anywhere from 10-35%, while long-term assets (assets held for 1 year or longer) are taxed at 15%.
The alternative minimum tax, which replaced the federal corporate income tax, imposed a 20% tax rate, regardless of income. Unfortunately, it does not allow business owners most of the exemptions they are entitled to. Because of this, many business owners wind up with a larger tax burden which leaves many of them strapped for cash. In the business world, cash is king, and without it, owners can’t buy new equipment or make other improvements which would help make more money or run more efficiently.
In addition to decreasing taxes, Mr. Trump plans on repealing and replacing Obamacare. In the law is a provision stating that the owners of businesses with 50 or more employees must buy and provide insurance for their employees. If the businesses refuse to comply, they will have to face the full force of the federal government. More and more businesses are looking like this because of the law:
Many businesses operate with 49 employees to circumvent the law, which, in turn, decreases their efficiency, and they lose customers in the process. This begins the downward spiral of laying off workers, losing more money, and eventually closing the doors for good.
Considering that Barack Obama has become so successful at writing unnecessary regulation, I believe that we should crown him the “King of Regulation,” with Joker Joe egging him on.
Each decree from the Oval Office has done absolutely nothing positive for small business owners except handcuff them. Each regulation he has pushed has crippled our economy, society, and country. Some of the regulations that come to mind concern nutritional labels, health code requirements, retirement advice, and higher energy efficiency standards for computers, dishwashers, and, ceiling fans. Yes, many business owners suffer because of these ridiculous regulations. My favorite one? One small shop had to repaint a wall in its supply room because the local health inspector wouldn’t give it its permit if it didn’t. And, of course, this was a day before it opened!
Due to high taxes and regulation, many business owners can not hire an attorney to interpret the regulations and give them a heads up. They are forced to learned regulations on the fly due to government officials “fix this by tomorrow or we’ll have an issue” mentality. If a business has a lot of code violations, then they will have to pay for it. Each violation adds up quickly, especially for small businesses.
Lower taxes, less regulation, and a government that promotes capitalism is the answer.
Mr. Trump plans to do all three things in order to grow small business in America. I know small business owners are thrilled. Small business owners just need to “stay strong!” Obama’s eight-year war on small business will be over soon.
Many thanks to Think Right Politics editor, Ben Circeo, owner of a Rocky Mountain Chocolate Factory franchise in California, for his invaluable thoughts and insight.