Between August 21 and 27 of this year, the MetLife & U.S. Chamber of Commerce Small Business Index surveyed 1,000 small business owners to line up their data for Q3 2020.
At the time, the majority of SMB’s ranked the economy as the top issue influencing who they would vote for in November.
In August, most SMB’s (78%) categorized the economy as “average,” “somewhat poor,” or “very poor.”
Many felt like they are facing severe long-term challenges that may be irrepairable.
After the economy, SMB’s cited taxes (27%), COVID-19 (25%), and healthcare (25%) as the most important 2020 election issues.
When it comes to political positions, 81% of SMB’s report that the impact of a candidate’s policies on their small business play a role in deciding which candidate to support. Nearly half (48%) say it plays a major factor in their decision.
The top two issues (the economy and taxes) were the major deciding factors for SMB’s in 2016, and the numbers show they remain to be two issues on this election cycle.
Economically, what’s changed since the survey in August is the Q3 GDP print of 33.1% against the 31% growth expected.
There is a lot to celebrate in this growth number, but it also must be noted that its being measured against Q2, which is historically the lowest recorded baseline. Some would argue Q2’s hole can be attributed to the lockdowns and others would argue it was the mishandling of the pandemic by the current administration.
Although the economy still remains about 3.5% smaller than at the end of 2019, it is an impressive bounceback that certainly give the impression to many that we’re trending in the right direction economically.
As far as taxes go, in February, a CNBC/SurveyMonkey poll showed that 64% of small business owners “approved of the way the current administration was handling the U.S. economy,” with 47% saying they “strongly approved.”
Now this was before the pandemic, and many SMB’s had felt the TCJA’s tax cuts had helped their businesses grow by both freeing up consumers to spend more, thus driving revenue to them, while also freeing up cash in their own businesses to grow (investing in equipment, expansion, employees, etc.)
Key Tax Implications for Small Business
-A potential payroll tax cut
-A potential individual tax rate from 22% to 15%
-A potential tax reduction on capital gains.
-Increasing the corporate tax rate from 21% to 28%
-Impose the 12.4% payroll (FICA) taxes on earned income (above $400,000), so a technical payroll tax raise on some
-Raising capital gains tax to 39.6% for income above $1,000,000
These are not all the details on the proposed tax plans, but some of the major tax issues merchants are keeping their eyes on.
What is your largest ongoing living expense?
And, so it goes with small businesses as well. Taxes will influence consumption as well as business behavior moving forward.
One candidate is leaning towards tax cuts for all to stimulate spending and growth, while another leans toward tax raises only for the wealthiest, while expanding opportunities through other avenues.
Both aim to improve small business’ prospects of recovering and growing out of the hole Covid blew through our economy, but both have different approaches on how they want to square up the 4 main issues: the economy, taxes, Covid and healthcare.
Small businesses employ over 40% of the American workforce and comprise nearly 50% of our GDP.
The country will rely heavily on the small businesses after Nov 3rd, and how they go, so will the country.
What are you hearing from your merchants and what do they want?