Although Trump has yet to concede, it appears as though President Biden and Vice President Harris will be sworn in on January 20th. This change in the presidency will have impacts on businesses around the world. With 8 out of 10 businesses already failing to sell, according to Forbes, and a pandemic exacerbating things for business owners, it is important to understand how this change will affect small businesses. The following are three different changes that business owners should expect if Biden becomes president.
1. More Taxes
First, small businesses should expect to see an increase in taxes. Due to his big spending plans for infrastructure and environmental initiatives, corporations and wealthy individuals can expect to see an increase in their taxes as this is how these programs are funded. Biden plans on increasing the corporate tax rate to 28 percent, up from 21 percent, and raising the ordinary and capital gains taxes for wealthier citizens. This means that if you are in the highest tax bracket or if your company is filed as a C-corporation, you can expect your taxes to increase. Also, investments and selling your business will not have as large of tax advantages as currently exist.
2. Increased Regulations
Second, small businesses can expect to see stricter regulations and increased antitrust scrutiny. First, Biden would require federal lending programs to use a credit reporting agency created by the administration. Second, they would mandate that businesses provide paid medical or family leave for up to 12 weeks. Third, he has promised to closely scrutinize mergers and acquisitions and crack down on antitrust enforcement. He will also impose stricter regulations on the oil and gas industry. Biden has pledged to end the sale of new leases for oil and gas development on public lands and waters. This means that by 2035, the U.S. oil and gas production could be 30% lower than if sales continued, driving prices through the roof. The regulations imposed by Biden and his administration could increase expenses for small businesses and have an adverse effect on profits.
3. More Support
Third, small businesses could expect some support as the pandemic continues to have adverse effects on industries across the board. The Biden administration wishes to create a “True Small Business Fund.” This is a program that will be dedicated to businesses with less than fifty employees in order to ensure they are benefiting from the Paycheck Protection Program. Biden wished to redirect funds not currently being used for corporate bailouts to real small businesses, such as mom-and-pop shops. He also plans to ensure that minority and women business owners are receiving an equal amount of support as these programs have failed to support the most vulnerable business owners in the past.
While many may not realize the direct implications of the policies Biden intends to push, understanding the outcomes of his policies is key to thriving in a world that has been devastated by a global pandemic. Many businesses that have failed to receive support during these unprecedented times may finally get the funding they need to stay alive and continue into the next business cycle. On the other hand, however, small businesses will end up paying more in taxes and in employment costs, reducing their profitability and possibly raising the unemployment rate.
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