Donald Trump’s economic policy would be a boon for small businesses, according to a report from the nonpartisan Tax Policy Center.
Trump’s proposal would slash corporate tax rates from 35 percent to 15 percent and simplify tax code, but it would leave many small businesses stuck in the dark with little relief.
Trump would increase the tax on imports and on exports, but his plan would leave small businesses with the biggest hit.
Trump wants to raise the corporate tax rate from 35 to 35 percent, but that would leave a lot of small businesses out in the cold, said Tariq Ali, director of the Center for Tax Policy Studies.
Small businesses make up about 5 percent of the workforce and are expected to grow to 12 percent by 2026.
Small business owners could also see lower paychecks if they hire temporary workers, Ali said.
Small and medium-sized businesses would be most affected by the tax cut, with their average payroll tax rate going up from 4.75 percent to 5.75.
That would translate to an average $4,000 tax cut for workers.
Small firms would see an average tax cut of $7,500, Ali wrote in the report.
The nonpartisan report also noted that the plan would have a negative impact on small businesses that have been doing well.
The Tax Policy Institute estimated that a reduction of the corporate rate from 25 to 15 would reduce small-business employment by about 2 million jobs over 10 years.
That’s a significant impact.
The study found that, of the roughly 1 million small- and medium‑sized businesses that were estimated to be in the U.S. that could be affected by a reduction in the corporate top rate from 15 percent to 10 percent, only one-quarter of those companies would be profitable.
Small-business owners would be hit particularly hard because of the low tax rate on imports, which is currently 25 percent and is currently being phased out.
Trump says his plan is for businesses to buy back their equipment, but the Tax Policy Council found that the tax cuts for equipment purchases would be far more significant than that.
Small companies that are in a tax advantaged status that could use that tax credit would be among the hardest hit by the plan, the report said.
The biggest hit would come from those that buy equipment with the equipment, Ali noted.
The tax cuts would hit the top 0.1 percent of U.P. earners, which would benefit from an average 3.5 percent reduction in their tax bill, according the report, which also found that many small business owners who have been investing for years and who are also making payroll taxes would see their tax bills go up.
That could have an impact on whether they want to invest in machinery and equipment.
The report also said that a lot more businesses would see a decrease in sales because they could no longer hire temporary employees, but a smaller number of businesses would feel the tax increases, Ali added.
Trump has called the plan the biggest tax cut in American history.
He said his plan was designed to give people more money to spend and give them jobs.
Trump also said his tax plan will make America great again, according an interview with CNBC that aired on Sunday.