The Election is Over: What Now?
I was recently asked the dreaded “What Now?” question from the chief advisor at Aston-Bailey Consulting Group and I let out a heavy sigh, preceded by a long pause. It is such a simple question, which is being asked by millions of Americans across the nation, with a multitude of answers. The general rule of thumb is to first review the impact of a new commander and chief on the economy. Here are the proposed legislative items that will impact our economy, as outlined in Donald Trump’s 100-day action plan to Make America Great Again:
Middle Class Tax Relief and Simplification Act
An economic plan designed to grow the economy 4% per year and create at least 25 million new jobs through massive tax reduction and simplification, in combination with trade reform, regulatory relief and lifting the restrictions on American energy. The largest tax reductions are for the middle class. A middle-class family with two children will get a 35% tax cut. The current number of brackets will be reduced from seven to three, and tax forms will likewise be greatly simplified. The business rate will be lowered from 35% to 15%, and the trillions of dollars of American corporate money overseas can now be brought back at a 10% rate.
Repeal and Replace Obamacare Act
Fully repeals Obamacare and replaces it with Health Savings Accounts, the ability to purchase health insurance across state lines and lets states manage Medicaid funds. Reforms will also include cutting the red tape at the FDA: there are over 4,000 drugs awaiting approval, and we especially want to speed the approval of life-saving medications.
Affordable Childcare and Eldercare Act
Allows Americans to deduct childcare and eldercare from their taxes, incentivizes employers to provide on-site childcare services and creates tax-free dependent care savings accounts for both young and elderly dependents, with matching contributions for low-income families.
According to the Small Business Administration, the U.S. Census Bureau and other sources there are between 20-30 million small and 70 percent of them are owned and operated by a single person. About 54 percent are based in the home. Together, these small businesses employ about 77 million Americans and account for 60-80 percent of all new jobs created. The proposed tax cuts could help some small businesses who are being taxed at a higher rate under current plans. Corporate taxes will be cut to 15% and top earners will pay taxes of 33%, as opposed to the current top individual rate of 39.6%. S-Corps and other entities like LLCs, would also have a top tax rate of 15%. All of these proposed tax cuts could provide great injections to the bottom line of companies across the nation.
Both the Affordable Care Act and Affordable Childcare and Elder Act will help employers navigate how benefits are administered within their organizations. Donald Trump’s recent statements about the Affordable Care Act have alluded to the fact that his administration will consider allowing children to remain on their parents health plans until the age of 26 as well as approval for people with pre-existing (un-insurable) health conditions.
At first glance, the proposed legislation under Donald Trump will help corporations with a huge decrease in their tax rate. The limited options in healthcare selection will make it easier for employers to share and review benefits with their employees, while not absorbing the majority of costs. All in all, small business owners will have to wait and see what unfolds over the first 12 months of Donald Trump’s presidency to fully assess the pros and cons.
