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Biden vs. Trump: How taxes, economy will influence business votes in 2020 election

Biden vs. Trump: How taxes, economy will influence business votes in 2020 election

10/21/2020 6:21:00 PM

Biden vs. Trump: How taxes, economy will influence business votes in 2020 election

The 2020 election choices are stark in Donald Trump versus Joe Biden , and on issues of taxes and the economy deciding on a vote has rarely been harder for business owners.

"Most are making less than $400,000 a year and should not have a tax increase coming," Nitti said, but he added that there are obviously small businesses and owners that make over that level and they will experience a tax increase under a Biden presidency. Additional income and capital gains taxes, and payroll and Social Security taxes on taxpayers over $400,000, are an issue for entrepreneurs to consider.

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Biden has promised that for taxpayers at the higher levels of income above $400,000, the top individual tax will revert to 39.6%, up from 37% currently. Long-term capital gains will also be taxes at 39.6% on income above $1 million.That can be important for small business owners holding valuable assets that they may be potentially selling in the future and Nitti said it is a conversation he is having with clients all the time, with many entrepreneurs worried about how fast that tax change could become law and whether they should be selling their business sooner rather than later.

"They are definitely taking this seriously right now," he said. A business may have never had a very significant windfall in any given year, but "selling a life's work" is a seminal moment, he said, and when an owner does exit the business they do not want to pay a much higher tax rate on the sale and any real estate that could be included as part of it as well.

Estate taxAs older owners plan their exit strategies, they do want to know that they have the option to pass on the wealth they have created to heirs on favorable tax terms in the event of death. Biden is planning to makewhich will affect the wealthiest Americans, and some small business owners among them.

Among the most important is Biden's plannedelimination of the step-up basis for passing on assetsto heirs, something to which small business owners pay close attention.Nitti said there will be ways for business owners to adjust their estates and limit the potential hit, but it does mean they need to sit down with estate planning experts and put in place a new plan to protect their assets. Doing nothing could ultimately mean taking a much bigger estate tax hit.

NFIB's Kuhlman said the individual tax rates and pass-through rates are the highest priority, followed by the corporate rate, and then estate taxes. The percentage of small businesses that need to do planning around estate taxes is significant, Kuhlman said, and while there are options to minimize tax consequences, it takes time and resources.

Covid-19Small business tax experts said that in this election, even with all of the potential tax implications, it can be hard for entrepreneurs to focus on the longer-term view when they are worried about making it to next year.Kuhlman said recent surveys conducted by the NFIB do showing improving confidence among business owners, but more stimulus is needed for small businesses and without another round of financial support from the federal government many businesses will not be around in the future to worry about their tax rates.

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That is not an issue which Main Street blames on any one figure. "Business owners are angry at everyone," Kuhlman said. "I think the discussion of tax policy and labor policy and even health-care are back of mind, and front of mind, top of mind is the very acute and urgent threat," he said.

According to the NFIB, about half of business owners anticipate needing additional financial help in the next 12 months. What is more frustrating for Main Street is that "it's never been the small business elements holding back a deal," he said. "We're recovering from near record lows in small business confidence over the summer and that's good, but the uncertainty elements of that also continue to be high."

"They blame everyone," said Nitti. ""But Trump is the man in charge and the buck stops there, and we should not still be in this situation. The argument can be made that the economy can never recover until the pandemic is under control."

Tax policy is always important to small business and that will check the box for Trump. ... But we have this weird dichotomy. They trust a Trump presidency will allow them to open the doors, but don't feel confident a Trump presidency will take care of the pandemic in a way that keeps friends and family and customers safe.

Tony Nittifederal tax partner at RubinBrownThe pandemic leaves small business owners with what can seem like some almost-impossible choices. A vote for Trump could mean a vote for more liberal reopening policies and more business protection from liability related to Covid cases among employees and customers.

But Nitti said for some business owners who voted for Trump in 2016 largely based on hopes for a tax cut, the last four years culminating inCovid-19have led them to conclude that it wasn't worth it. "They will go in a different direction, and the pandemic changed that," he said.

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"Tax policy is always important to small business and that will check the box for Trump. ... But we have this weird dichotomy. They trust a Trump presidency will allow them to open the doors, but don't feel confident a Trump presidency will take care of the pandemic in a way that keeps friends and family and customers safe."

"The pandemic is not partisan. Just because Trump gets reelected doesn't mean businesses can reopen, or Biden that the pandemic goes away," he added.NFIB has pushed back against the type ofemergency standardsthat Biden supports OSHA putting in place, and of which labor unions have been strong proponents.

Kuhlman described the debate over business liability as another example of "stark" policy differences and he noted that over half of its small business survey audience haved indicate throughout the pandemic that they are very concerned about lawsuits, a data point that has ranged from 55% to 70% in recent work, and yet there seems to be a lack of middle ground in D.C. It is an issue he noted that House Speaker Nancy Pelosi has said is a sticking point, and Senate Majority Leader Mitch McConnell has referred to as a "red line."

Small business owners in their own wordsNot all small business owners are being driven by core tax factors or general regulatory positions of the two major parties. Some small business owners are still more impacted by Trump's trade war with China than any other factor, and entrepreneurs are individuals — some are swayed more by personal political philosophies and fears.

Adam Miller, 28-year-old owner of Revel Bikes, a high-end bike manufacturer in Carbondale, Colorado, says the pandemic has led to a boom in his business as more Americans flock to outdoor activities and away from overseas vacations, and stimulus in response to Covid triggered more consumer spending. "I feel like I couldn't be luckier. We can barely keep up with demand," he said.

But Miller — who as an outdoor enthusiast has problems with Trump's environmental record and as an owner recently began offering health insurance to all of his 18 employees even though it was costly because he believes health care is a basic right — is voting for Biden.

"I am on the liberal side of things, which is tough when you own a small business. I am quite in the middle when it comes to taxes because I can see the GOP side of things,' Miller said, explaining that higher taxes means less money for entrepreneurs to reinvest, and that can mean less hiring.

But whether the tax rate is higher or lower, he said the uncertainties that come with a Trump presidency weigh more heavily on his vote. Though it has moved some manufacturing to other parts of Asia in recent years, Revel relies to a large degree on manufacturing in China. Miller, who funded his business "with my house and bank loans" said the combination of tariffs and the constantly changing administration position on trade is a larger concern than paying more in taxes.

"Biden will make it so I pay 7% more in taxes, but if I don't have unknown and radical changes making it hard to do supply chain planning, I'm confident I'll make more profits," Miller said. "I spent the last four years of my life flying to China once every few months. Any business owner who manufactures overseas should steer far away from a Trump presidency."

The pandemic has added to his vote against Trump based on uncertainty. "If I look at the short term, we won't have as many mandates under Trump as Biden for opening and closing, but long-term, if this virus is not under control, we will keep having the same problems," Miller said. "If the pandemic is not under control, it will hurt all of us long term."

He see Biden as a vote for stability. "As a business owner, if you are putting out fires every day, how can you run a business under that regime?"Other business owners are viewing stability in terms more closely aligned with individual political preferences. Ben Thomas, owner of 5 Pound Apparel in Springfield, Missouri, who identifies as independent, voted for Trump in the last election and said he is leaning that way again. He sees the pandemic as a global problem over which it is unfair to blame Trump.

I wish Trump would act more presidential sometimes, and I hear many people say they can't take it and that's why they won't vote for him. In my circle, everyone just talks about how they wish there were better options on the table.Ben Thomas

owner of the 5 Pound Apparel retail shop in Springfield, MissouriHe is not happy with Trump's messaging on masks, but his retail shop has held up well during the pandemic, and being shut down for roughly seven weeks forced Thomas to launch an online shop and monthly subscription service — ideas he was thinking about pre-Covid but did not enact until the pandemic triggered quick action. Now sales are similar to the level from before coronavirus.

Thomas is not motivated to vote for Trump based on the pandemic, or taxes. "Taxes are one of those things necessary to operate in a country where we pave roads, and everyone is part of the system ... it doesn't play into how I view the election. I would say I vote more as an individual," he said.

Ultimately, he is being swayed by fear, but not the same fears that Miller has of a Trump second term and uncertainty weighing on business decisions. In fact, for Thomas, even amid the pandemic, the current president is the better bet for stability."I am a little bit scared of what Biden would do ... policies like the Green New Deal. ... Change for the sake of change isn't good," Thomas said. "I definitely prefer a candidate other than Trump or Biden. I think Biden is a relatively moderate Democrat but I don't know if he can fight off the far left progressives in the party. ... I wish Trump would act more presidential sometimes, and I hear many people say they can't take it and that's why they won't vote for him. In my circle, everyone just talks about how they wish there were better options on the table. But fundamental structural changes scare me more, and are coming from the Democratic side."

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Misinformation watch on the 2020 election

Misinformation Watch is your guide to false and misleading content online — how it spreads, who it impacts, and what the Big Tech platforms are doing (or not) about it.

Biden about to blow a 3-1 lead to Trump in the Finals. All over his TaxTheRich plan! BidenTaxPlan CNBC MAGA2020 realDonaldTrump Voters should think very simple economics. When govt. raises taxes on rich ppl or corp. ultimately comes to lower and middle classes to pay because rich ppl and corp. know how to make more money/profits. Do u know any rich ppl or corp cutting their profit down due to high taxes?

Under Biden Capital gains will go up at least 15% all oil boom in 🇺🇸 is shut down Healthcare for independent businesses especially small businesses gets rediculously higher 'which it already is under Obama Care' hey does that matter under the Democrats I bullshit SOCIAL ISSUES How will the collapse and replacement of the Dollar figure in? Our country is bleeding money.., we must raise revenues and cut costs. China is preparing for war, and we hate preparing for bankruptcy. Something has to CHANGE!

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