In a 1925 speech, President Calvin Coolidge declared, “The chief business of the American people is business.” Subsequent political leaders have boiled it down to: “The business of America is business.”
The relationship between politics and business is a tight one. At the height of election season, many promises are made that, if carried out, can impact your company favorably — or otherwise. Whether you’re voting at the local, state or national level, it’s important to consider how a candidate might impact your business.
So where should you focus during political debates to prepare yourself for what may come? Here are a few types of policies business owners should examine as elections approach.
Policies at the State and Local Level
State and local elections often have a bigger impact on business than national ones, as governors, state senators, delegates and many more positions are voted into office.
Here’s a quick rundown on policies at the state and local level, and their potential implications for you, depending on the nature of your business:
- Minimum wage laws: While much attention is focused on the $7.25/hour federal minimum wage, states and local governments are very active on this front, requiring higher wages than the federal minimum. In 2018, minimum wage changes took effect in 18 states and 20 cities, according to CNN. Depending on whether your business can afford to increase wages, these changes could impact your hiring plans.
- Workers’ comp: States regularly change workers’ comp laws, whether making it harder or easier for workers to file claims. Changes to these laws can impact your premiums.
- Employment discrimination: Technically, federal employment discrimination laws only affect companies with at least 15 employees. State and even local anti-discrimination laws, however, can be stricter than the federal laws. Understanding changes to these laws can help prevent costly discrimination lawsuits.
- Business tax rates and tax regulations for small business: If your business is a proprietorship or pass-through entity like a Sub S corporation, your state income taxes will, in effect, determine your business tax. But C corporations are taxed at different rates in different states, and those rates can change.
- Tax subsidies: States and localities often create tax abatement incentives to lure businesses to set up shop in particular areas, typically places where business employment is low. It’s important to consider how these incentives could impact your business.
Policies at the National Level
In the upcoming federal election, the relationship between politics and business could be particularly significant if there is a change in which political party controls either house of Congress. At present, Republicans hold majorities in both the House and the Senate. If, for example, Democrats gain the majority in the House, more legislation favored by Democrats could become law, assuming it isn’t vetoed by the Republican president.
Here are some key federal policies to monitor during elections:
- Tax policy: At the end of 2017, the Tax Cuts and Jobs Act became law, with huge impacts on businesses. Federal tax regulations for small business (or any other size business) remain a key area to watch.
- Healthcare: The Affordable Care Act has been a topic of contention among elected officials for a decade. Although the law has been scaled back, any promised new changes to the law could affect your obligations, if your company is large enough.
- Employee benefits: Proposals to make it easier for small businesses to offer retirement plans and streamlined health benefits are commonly made during national election campaigns.
- International trade policy: Although the president has a lot of authority in this area, Congress also plays an important role. Proposals to restrict or liberalize trade rules, including tariffs, can affect small business directly or indirectly.
- Immigration policy: Many businesses may be impacted by any labor market changes resulting from immigration, making it an important issue to follow.
Whether a law impacts your business depends on the fine print in the regulations. As the old saying goes, “The devil is in the details.” So after you’ve kept an eye on the election campaigns and results, stay tuned to see how the laws discussed during the election actually take shape. Meanwhile, keep a few financing options on hand, in case these policies end up affecting your bottom line.