Democratic presidential nominee Joe Biden’s economic proposals are, on the surface, not very friendly to small business.
He’s proposing tax increases, more regulations, higher wages, a return to the Affordable Care Act and changes to independent contracting and other labor rules that would create more costs and bureaucracy. So, does that mean that Biden would be a bad president for small business? Maybe. Maybe not. Business owners have a responsibility to their employees and communities to put politics aside and objectively evaluate how each candidate would impact their companies before casting their votes.
Unfortunately, the Biden campaign has not provided much help. The campaign recently launched a “small business outreach” program which, as I wrote here, was nothing more than a brief marketing campaign and the formation of an “advisory council” made up of business owners (ice cream shops!) and former Obama administration fans to “assess small business issues.” That’s not what business owners want. They want specific, tangible, financial reasons why Joe Biden would be better – or at least just as good – for small businesses than President Trump.
So, let me make up for the communication failures of the candidate’s campaign staff by laying out a few of these reasons for all of our consideration.
Taxes
First, let’s get the elephant in the room out of the way. Biden will increase our taxes by raising capital gains and individual rates and limiting the popular “pass through” deduction. But these tax increases will mostly hurt wealthier entrepreneurs — those making more than $400,000 per year. (The average small business owner makes about $70,000 annually.) Biden’s proposal to increase the corporate rate from 21 to 28 percent would impact those corporations – who are mostly larger – that file corporate tax returns, not partnerships or S-corporations as most small businesses do. Yes, these increases will have an impact on investments, hiring and growth. But most small businesses – the pizza shop, dry cleaner, retailer or restauranteur – will likely not feel much pain, if any.
Infrastructure
Biden supports the House’s Moving Forward Act, passed in June along party lines, which targets $1.5 trillion for infrastructure. Republicans argue over some of the ways the money will be spent (for example, about $500 billion in transportation funding is tied to “green” measures that force states to comply with certain climate initiatives). But that aside, most of the funds are for repairing and upgrading the country’s transportation hubs, roads, bridges and energy grid.
Regardless of whether you agree or not about how the money will flow, the money will still flow. That’s good news for the more than 700,000 small and medium sized firms in the construction industry (and that doesn’t include the hundreds of thousands of small firms that provide indirect services) who would see a significant increase in revenue opportunities once a bill is passed and projects get started. It should be noted that Trump and other Republicans have in the past proposed similar (though not as “green”) infrastructure spending but have failed to pass a bill in the four years of his administration.
Immigration
Biden’s immigration plan is not as draconian and divisive as Trump’s and could be a good thing for small businesses. According to this report he “promised on day one” of his presidency to “send a bill to Congress that creates a clear road map to citizenship for Dreamers and 11 million undocumented people who are already strengthening our nation.” No one is expecting this to be easy, and the issue is polarizing. But through executive actions and possible congressional legislation, Biden hopes to “modernize America’s immigration system, reassert America’s commitment to asylum-seekers and refugees, end the mismanagement of the asylum system” and prioritize integration, promote immigrant entrepreneurship, increase access to language instruction and promote civil engagement.
Regardless of where you stand on immigration, no one denies that the system is in need of an overhaul. Most small businesses – particularly those in the technology, leisure, construction and field service industries – have a desperate need for additional, lower-skilled, lower-paid workers to perform the menial tasks that robots are still not able to do. Many of my clients have bitterly complained that the president’s immigration policies have created shortages of these workers, driving up compensation costs.
China
On China, Biden is arguably as tough as the president. But he’s not as unpredictable. Rather than indiscriminatingly slapping on hefty tariffs and making personal threats that risk an out-and-out trade war, Biden says he would “propose new policies aimed at cracking down on China’s competitive economic advantages.” He also says he’ll “take measures to strengthen the supply chain so the U.S. is not reliant on China for critical products, such as drugs and medical equipment.” He claims he is “committed to ensuring government contracts go to American companies and will crack down on companies that label their products as having been made in America when they were actually manufactured elsewhere.” Biden also vows to take “aggressive trade enforcement actions against China over currency manipulation or other unfair trade practices.”
Good luck.
No one argues that doing business with China is difficult and oftentimes unfair. But unfortunately, Trump has not had much success in fixing this problem. American businesses want to do business with a country that has such an enormous market and infrastructure if the playing field can be leveled. Biden’s approach can’t be any worse than what’s been tried in the past.
Other Small Business Investments
Finally, Biden supports funding for certain programs that would directly benefit small businesses. Although unspecific, he promises to provide funding to help American manufacturers, “with a particular focus on smaller manufacturers and those owned by women and people of color through specific incentives, additional resources, and new financing tools.” He also wants to invest billions in research and development, encourage more manufacturing in the U.S. and “implement a multi-pronged small business contracting strategy that includes formula-based awards, widespread outreach and counseling to small businesses owners, and transparent monitoring of contract awards.” Biden also wants to tighten the rules around any future COVID-related funding, such as the Paycheck Protection Program, so that the neediest small businesses get priority.
So, as a small business owner, have I made my case for Biden? Look, I’m still undecided myself. But you have to agree that the above reasons are a little more persuasive than what his own campaign has been communicating. An “advisory council”? Good grief.
Maybe Biden’s campaign dropped the ball on its small business outreach because, given his commanding lead in the polls, it just doesn’t deserve as much attention as other issues. That would be a mistake. Thirty million small business owners are going to the polls in just a few weeks. Most are frustrated and fed up with the president’s behavior. But few will argue that another four years of Donald Trump will likely be better for their bank accounts than Joe Biden. For them to vote against the current president, the Biden campaign needs to make a better case – such as the one I’ve made above – for why he would be just as good, if not better, for small business.
Gene Marks is founder of The Marks Group, a small-business consulting firm. He frequently appears on CNBC, Fox Business and MSNBC.