The new POTUS will impact the country and our lives in many ways, but how will they affect your business income? We examine inside.
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It’s hard to forget it is an election year, but just in case you’re taking a break from the coverage, we’re here to remind you there will be a new president in 2017.
And he or she will likely impact your bottom line.
According to an on-site poll of 8,000 small business owners conducted by small business online resource Manta, 60 percent of GOP voters will support Trump in their states’ primaries, while Cruz only received 16 percent of small business support.
On the Democratic front, 56 percent of small business owners plan to vote for Hillary, while 40 percent support Bernie.
With 60 percent of small business owners voting in the primaries, they’re two times more active than the average consumer at this stage of the election.
The Manta survey finds that the top concerns of small business owners include the economy (49 percent), taxes (18 percent) and healthcare (10 percent).
“Our customers are concerned about cash flow, first and foremost, and taxes represent a serious cash consideration for a business.
Depending on which candidate is elected, it could affect everything from taxes to the amount of loans available to businesses,” said Min Choi, Managing Director at LoanMe.
For a detailed breakdown of how each of the leading candidates could affect your business income in the coming years, read on.
According to Forbes, the main goal of Jeb Bush’s corporate tax plan is lowering the U.S. corporate tax rate to 20 percent. He favors the elimination of most corporate tax deductions, with the exception of those related to new capital investments.
According to Inc, Bush is pro-immigration reform and wants to raise the retirement age to 70. He hopes to create simpler 401k plans for small businesses and thinks it’s a good idea to pool them together for retirement accounts.
His plan establishes three tax brackets, with rates of 10 percent, 25 percent, and 28 percent.
The top rate applies to taxable income over $85,750 for single filers and $141,200 for joint filers. He wants to exempt workers over 67 years old from payroll taxes.
Bush also proposes a one-time 8.75 percent tax for any off-shore profits that are repatriated into the U.S.
Finally, his plan eliminates the deductibility of interest and taxes-carried interest at ordinary income rates.
Related Article: White House in 2016: What's on the Horizon for Small Business?
Dealstruk conducted a survey of 410 small business owners to get a pulse on what they’re thinking about the coming election and our candidates. “Nearly 1/4 (22 percent) of small business respondents chose Donald Trump as the candidate they felt would be best for their business,” says Candace Klein, Chief Strategy Officer at Dealstruck, Inc. “32 percent supported Bernie Sanders. 19 percent chose Hillary Clinton.”
Donald Trump is the Republican frontrunner, leading in national polls and having won the New Hampshire primary. According to TaxFoundation.org, Trump’s tax plan ends the deferral of overseas corporate income but preserves the foreign tax credit.
He wants to enact repatriation of foreign income at a 10 percent rate, and plans to lower the top corporate rate to 15 percent.
Trump wants to phase out all income tax deductions except for the charitable deduction and the mortgage interest deduction.
His plan establishes four tax brackets, with rates of zero percent, 10 percent, 20 percent and 25 percent.
The top rate applies to income over $150,000 for single filers and $300,000 for joint filers.
Of all of the Republican candidates’ tax plans, Cruz’s proposals are perhaps the most divergent from the status quo. Under his plan, as summarized at Forbes, Cruz would institute a flat individual income tax rate of 10 percent, eliminate payroll taxes, and replace the current corporate tax structure with a 16 percent rate.
In addition, this candidate, who won the Iowa primary caucus, has advocated abolishing the IRS.
Though the cost savings sounds good, business doesn’t like change. Cruz’s impact on your income could be rocky in the short term.
According to TaxFoundation.org, Cruz also wants to create tax-free savings accounts for up to $25,000 of savings a year.
Finally, his plan eliminates all income tax credits except for the earned income tax credit and the child tax credit. He wants to expand the earned income tax credit by 20 percent.
According to TaxFoundation.org, Kasich’s tax plan establishes three brackets for personal income tax, with a top rate of 28 percent.
Widely regarded as a moderate, he approved expanding Medicare of his home state of Ohio and favors immigration reform.
Kasich, who came in second in the New Hampshire Republican primary, wants to double the research and development credit for businesses with under $20M in gross revenues.
He also advocates lowering the rate on capital gains and dividends income to 10 percent and lowers the top corporate rate to 25 percent.
Finally, he wants to see a move to full expensing of investment costs when it comes to corporate income.
For small businesses registered as S-Corporations, corporate profits flow onto the owner’s individual tax return. This idea could have a big impact on your bottom line, if the candidate makes it past Super Tuesday.
Related Article: Payday for Uncle Sam: 5 Tax Tips For Small Business Owners
According to TaxFoundation.org, Rubio hopes to eliminate the head of household filing status, remove interest income from the tax base, and provide a new tax credit for businesses that offer paid family leave.
Rubio’s plan lowers the top corporate rate to 25 percent. His proposal also replaces the standard deduction, personal exemption, and 10 percent bracket with a refundable personal credit.
He also wants to move to a territorial tax system that would exempt all active foreign income of U.S. corporations from domestic taxation. According to Forbes, Rubio’s plan will likely involve a lot of scrutiny of foreign income before it can pass through tax-free.
According to Inc, Rubio wants to roll back the Dodd-Frank law, restrict new federal regulations that affect business owners, and protect the on-demand economy from regulation.
Finally, Rubio’s tax plan eliminates the additional Medicare tax on compensation over $200,000 and establishes an additional child credit of $2,500, used to offset income and payroll taxes.
In an op-ed the Democratic candidate penned for LinkedIn, reprinted at Inc.com, Secretary Clinton wants to be a small business president.
She promises to cut red tape, expand access to capital, provide tax relief and simplification for small business, and expand access to new markets.
According to TaxFoundation.org, Clinton’s tax plan establishes business tax credits for profit-sharing and apprenticeships, taxes carried interest at ordinary income rates, and establishes a tax on high-frequency financial transactions.
Clinton has no specific payroll tax proposals or corporate income tax rate proposals.
Her plan strengthens rules preventing inversions and imposes an "exit tax" on un-repatriated earnings of U.S. firms going through inversions.
When it comes to income tax rates on capital gains, Clinton wants to add a 4 percent surtax on income over $5 million and raise rates on medium-term investments held for less than six years to between 24 percent and 39.6 percent.
Bernie Sanders is calling for a $15 per hour minimum wage over the next several years, as well as overtime pay protection and a strengthened labor movement.
Sanders’ tax plan establishes a financial transactions tax, at a rate between 0.005 percent and 0.5 percent, with an offsetting credit for low-income Americans. This transaction tax will be used to fund free tuition at public universities.
According to TaxFoundation.org, the Sanders tax plan raises the employer-side payroll tax rate by 6.2 percent to fund a single-payer healthcare system, and applies the Social Security payroll tax to earnings over $250,000.
He also wants to create a new payroll tax of 0.2 percent, to fund paid family leave.
The Democratic candidate wants to end the deferral of tax on foreign income, create several limits on the foreign tax credit, and revise rules about corporate inversions and foreign corporations operating domestically.
Finally, his plan calls for capital gains and dividends to be taxed at ordinary income rates for households with income over $250,000.
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