Tax Deduction

President-elect Donald Trumps second term could bring big changes to Main Street, but small business advocacy groups have mixed views about his agenda.It comes as the National Federation of Independent Business measure of uncertainty is at its highest level on record, according to a newly released survey taken before the election. In addition to the shifting political environment, many business owners are grappling with inflation and workforce shortages. With the election over, small business owners will begin to feel less uncertain about future business conditions, said NFIB chief economist Bill Dunkelberg. Although optimism is on the rise on Main Street, small business owners are still facing unprecedented economic adversity. It comes as some small business owners are bracing for the impact of increased tariffs. On Monday, Trump posted on Truth Social that one of his first executive orders will impose a 25% tax on all products coming into the United States from Mexico and Canada. This Tariff will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country! Both Mexico and Canada have the absolute right and power to easily solve this long simmering problem, Trump furthered. Ris Lacoste, a restaurant owner in Washington, D.C., is concerned prices for some ingredients could go up. We do get some produce from the warmer climates, and that includes Mexico, so I think that’s going to affect us, especially over the winter, Lacoste said. I think it’s going to be difficult. Im hoping not. I’m hoping that a lot of these things don’t happen. She’s not the only one with concerns. “Small business owners are already hunkering down to weather the painful impact of a potential trade war. They’re stocking up on inventory. They’re even thinking of moving operations offshore to manufacture for the export market, if they’re able to do that,” said John Arensmeyer, the founder and CEO of Small Business Majority.NFIBs vice president of federal government relations, Jeff Brabant, said they’re not taking a formal stance on Trumps tariffs proposal at this point, but, generally, their members are optimistic about his re-election.”They’re hopeful there will be less burdensome regulations, and they’re hopeful that they’re not going to see a massive tax increase at the end of next year, Brabant said. The Tax Cuts and Jobs Act, which passed during Trumps first term, allowed eligible small business owners to deduct up to 20 percent of their business income. Supporters say the provision, also called the pass-through deduction, leveled the playing field with big corporations. It was a resounding success, but unfortunately, a lot of those provisions are about to expire, Brabant said. Brabant believes Congress, which will soon be controlled by Republicans, is well-positioned to extend the policy or make it permanent. However, critics of the pass-through deduction argue it disproportionately benefits the wealthiest Americans and excludes some small businesses. They are calling for a different approach to help Main Street.We’ve proposed a $25,000 standard deduction to small business income that would be from the bottom up so that those smaller businesses would be actually getting a bigger percentage benefit than those larger businesses, Arensmeyer said. As lawmakers prepare to revisit that tax debate next year, its still unclear who will lead the Small Business Administration during Trumps second term. As of Saturday morning, Trump had not announced his pick to lead the agency, but its likely to be a new face. Trump has already tapped his former SBA administrator, Linda McMahon, to lead the Department of Education. Molly Day, vice president of public affairs for the National Small Business Association, said the choice will be a chance for Trump to signal his priorities for the agency. The pick for SBA administrator should support a fully staffed SBA Office of Advocacy which has been absent a chief counsel for years. This small office plays a major role in protecting small businesses when it comes to regulations, and they need someone with robust legal and small business experience. The next SBA administrator should also be committed to maintaining SBAs strong lending programs as well as increasing the federal governments federal contracting goal from 23 percent to 30 percent, Day wrote in a statement.