Trump Effect on Small Business is a Real “Thing”
Donald Trump’s election has brought with it a swarth of changes to small business policies as well as taxes and financial regulations. Many are beginning to refer to it as the Trump effect on small business. Over the first year and a half of Trump’s presidency, America has seen a big impact on the economy, dubbed the “Trump Effect”. Despite the concern of congressional gridlock, Trump has successfully enacted new regulations to push small business growth while cutting hundreds of growth-inhibiting regulations, improved unemployment rates, and overhauled the economy as a whole.
Unemployment has gone down
Within the first few months of Trump’s presidency, the amount of people working rose by nearly 400,000. Compared to Obama’s first few months, where only 15,000 jobs were added, this is a huge first step. The unemployment rate has since hit record lows, mirroring pre-recession levels. The unemployment rate for April lies at 3.9%, even lower than what it was in Trump’s first few months.
Trump’s huge tax overhaul
A key part of President Trump’s economic overhaul has been the passage of the Tax Cut and Reform Act. The act has made plenty of incentives available, which has greatly increased the bottom line for many businesses, big and small. Pass-through businesses have seen a 20 percent tax reduction on income. Analysts have determined this will result in roughly $415 billion in savings for these businesses. The new pass through tax reduction benefits over 40 million taxpayers.
Additionally, the Tax Cut and Reform Act dramatically decreases corporate taxes, which covers many small businesses. The child tax credit doubles, and American families as a whole are seeing notable increases in after-tax income. Estimates are saying that around 80% of tax payers see tax cuts. The economy has seen a positive impact due to households responding to tax cuts by consuming more.
Small Business optimism is at record highs
The Index of Small Business Optimism has been surging since Trump’s election, reaching 104.8 in April. The Index has also reported a record stream of improved profits. Small business owners being more optimistic than ever has resulted in more jobs being created, better wages, and healthier investment. It’s clear that the tax cuts are having a greater effect on small business owners, rather than start-up entrepreneurs.
The jump in optimism is affecting more than half of small business owners, who are now investing more into their companies. This isn’t just due to tax cuts, but because of the overall economic shift that Trump has pushed for.
Trump’s commitment to deregulation
Business owners have been experiencing a significant decrease in regulatory burdens, which have long been a roadblock for entrepreneurship. Many small businesses were extremely “demotivated” to enter the market. Trump’s move to roll back regulations has greatly increased the welfare of small businesses as well as market competition.
Businesses are reporting increased profits due to the move to deregulate. Trump’s policy of repealing two regulations for every one introduced has removed billions in regulatory costs on the economy. While the economy saw hundreds of major regulations introduced during the Obama administration, Trump plans to free business owners of the burden placed on them to comply.
The End of the Obama Era
Trump’s deregulation has specifically targeted a wealth of policies enacted during the Obama administration. The last year has seen a reversal of environmental-related regulations, finance regulations, and the individual mandate in the Affordable Care Act. These changes have been beneficial to small businesses especially. Trump’s targeting of the Environmental Protection Agency has been a key pro-business catalyst for businesses, showing true reform from the previous era.
Repealing Obama Care, a key part of Trump’s platform, is starting to take effect, slowly but surely. The repeal of the Obama Care Individual Mandate means there is no longer a requirement for Americans to have at least basic health insurance coverage. The repeal is saving taxpayers billions and marks the first significant cut to the flawed Affordable Care Act, the healthcare reform law from 2010.
The cost of health care still remains a big issue for businesses. While the Obama Care Individual Mandate has been lifted, 30% of business owners are still unhappy with the financial burdens of health care. Small firms still must deal with heavy administrative burdens that come with the Affordable Care Act.
Getting out of harmful deals
The President has successfully gotten the US out of the Trans-Pacific Partnership as well the Paris Climate accord. NAFTA is being re-negotiated to give the US better terms, which were previously criticized by Trump for being unfair to America.
American companies are now finding it harder to outsource labor to foreign workers through the H-1B visa program. This isn’t due to any changes in the law (yet), but rather because of an increased number of requests for evidence, sent out by the Citizen and Immigration Services department. Companies in the US have more incentive to hire from within the country, greatly increasing job creation.
Increased stock market confidence
Additionally, experts have noted the stock market reaching record highs, while job creation also climbs. Investors are seeing stocks up ticking and breaking records since Trump’s inauguration. In fact, the US stock market has reported approximately $6 billion in gains. The Dow Jones has also rallied, with an industrial average of 31.5%. 401(k) investors are looking at rates of around 32%, another huge result. Also, the expectations of pro-business policies in the days following Trump’s inauguration led to a spike in the dollar value.
Bringing Jobs Back
President Trump’s promise to bring back jobs to America was not left unfulfilled. In a matter of 1 year, the President managed to get a wide range of CEOs to commit to bringing back or creating thousands of jobs. Brian Krzanich, the CEO of Intel, announced a multi-billion-dollar investment in an Arizona factory that would employ over 10,000 people. Sprint CEO Marcelo Claure also decided to keep 5,000 jobs in the US, as well as add 3,000 more. Ford responded to the election by canceling a Mexico plant, creating 700 jobs for the US. The list goes on, including plans from Lockheed Martin, U.S. Steele, and Amazon to support jobs in the United States.
Ian is a student of Business at the Honors College at the University of Alabama.
Contact Ian at email@example.com
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