Could Trump’s Small Business Policies Tilt the Electoral Map? It Depends on Tax Reform

Could Trump’s Small Business Policies Tilt the Electoral Map?  It Depends on Tax Reform

Entrepreneurs anxious to add jobs and spur economic growth are cheered by the president's new tax and regulatory initiatives.

Donald Trump may have the best opportunity of any president in recent years to consolidate political support among America’s 27 million small business owners — giving his administration and the GOP a distinct advantage in future elections.

That conclusion comes from an analysis of voting data in recent elections and from the likely impact of Trump’s economic policies, which are shaping up to be the most small business-friendly the country has seen in some time.

It also derives from the potential impact of a new social media marketing campaign to be launched later this year by Linda McMahon, the founder of the World Wrestling Entertainment empire who heads up Trump’s Small Business Administration.  McMahon is already traveling the country on a “listening tour” intended to raise the profile of small businesses while creating new pressure for supportive legislation from a heavily GOP-dominated Congress.

“Small” businesses — defined by federal officials as companies with 500 or less employees — comprise the vast majority (97%) of all US companies.  They are not usually thought of as a distinct voting constituency, in part because they are scattered all across the country, and are not formally organized or mobilized to participate in electoral politics as large corporations or women’s and ethnic groups typically are.

While ably represented by trade groups like the US Chamber of Commerce or the National Federation of Independent Business, or by separate industry associations, small business owners tend to be broadly conservative on economic issues.  However, they’re also divided on social issues.  And historically, they’ve been critical of the way Democrats and Republicans have approached their interests, leaving many disaffected without strong partisan affiliations.

Past studies of small business voting patterns have suggested that entrepreneurial voting behavior is not determined by a political candidate’s position on issues of special concern to small businesses, such as taxes and regulations, or wage and overtime rules.

Instead, demographics are thought to play a larger role.  For example, while businesses overall tend to lean Republican, women owners lean Democratic.  The same is true of African-American and Hispanic entrepreneurs.

However, a closer look at the data suggests that demographic breakdowns for small business owners are not the same as for the voting population at large.  For example, over 40% of Hispanic business owners do vote Republican, higher than the percentage for Hispanic voters generally.   The same disparity is true for African-American business owners, who are more than twice as likely as Black voters overall to vote for the GOP.

But it’s Trump’s stance on issues like rolling back Obama-era regulations, slashing the business tax rate to 15%, and abolishing new minimum wage and overtime standards that are already giving small businesses reason to cheer the incoming regime.  With the economy poised for takeoff, small businesses need fresh incentives to make new outlays and hire more workers.

A key issue that could determine just how far the small business sector moves into the Trump camp is tax reform.  A proposal is pending that would give small businesses a major tax break known as “full expensing.”  It would allow companies to immediately deduct the cost of capital investments from their tax bill, including the purchase of new equipment and facilities.

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