The 2014 election was primarily focused on jobs. In spite of the major differences between the parties on essentially every issue, each party’s policies on job growth and economic restoration were basically aligned.
- Tax Incentives – On the list for both parties, tax reform is at the top of their priorities. Rep. Paul Ryan (R-Wisc.) and Rep. Orrin Hatch (R-Utah) – likely to head the finance committees in each chamber – are ready for change. Currently, most small businesses are set up as pass-through entities – allowing owners to pay taxes as a part of their personal taxes – and would not benefit much from legislation that only decreases a corporate rate. A reform that includes the lowering of both corporate and individual taxes may be in the works from the new Senate.
- Interest Rates – Obtaining credit is essential for business owners. With low interest rates, companies will be able to borrow at low costs, encouraging capital expenditures, corporate purchases, consumer spending and economic production.
- Red Tape and Regulations – Small businesses generally have a tough time adapting and adhering to mounting government regulations, red tape and barriers to doing business. It seems as if the government, at times, makes it more difficult for businesses to stay afloat. Thankfully, the Small Business Act was created, giving small businesses a fair chance to compete in the economic market.
Even with policies supported by both parties set in place to help businesses, Republicans have planned to promote a few additional key bills in hopes of bringing unemployment under 5 percent.
Key Legislation for Small Businesses
- American Research and Competitiveness – Amends the Internal Revenue Code to modify the rate for tax credits used for qualified research expenses and makes the credit permanent.
- America’s Small Business Tax Relief – Increases the cap on the amount of deductible investments within the first year of expensing and making it permanent.
- Bonus Depreciation Modified and Made Permanent – Additional 50 percent depreciation allowance becomes permanent.
- Hire More Heroes Act – Permits an employer to exclude veterans who have healthcare coverage under a healthcare program administered by the Department of Veterans Affairs or Department of Defense from their list of employees. This allows small businesses to keep their list of employees shorter, therefore not requiring them to provide healthcare coverage under the requirements of the Affordable Care Act (ACA). The incentive is to hire more veterans.
- Jobs for America Act – Redefines “full-time employee” as an employee who works an average of 40 hours per week – currently 30 hours per week. This is designed to exempt small businesses from ACA costs.
- Regulatory Flexibility Improvements Act – In order to minimize any major economic impact and maximize the favorable economic impact on small entities, this act requires initial and final regulatory flexibility analyses to define contingencies to a projected government rule.
- S Corporation Permanent Tax Relief – Several modifications to tax reductions for S corporations become permanent under this rule.
As these bills and regulations are placed into effect, a positive impact on job growth and reduction of red tape and business expenses seem hopeful. However, it may take a year or two before we see any real significant change.
The real change that we may see immediately is the end of political gridlock. The GOP will have to negotiate with the White House now, leaving it up to President Obama to push for compromise and moderation without the constant squabbling of Congress. Perhaps the President and the Republicans can find a common ground and hopefully bring some stability to our economy.