While operating a business in the United States can be a very lucrative, rewarding and an honorable way to make a living it can also be an expensive endeavor. A complicated tax code, onerous regulations and foreign competition can turn the American dream into a devastating nightmare. I recently reviewed a National Small Business Association survey and learned that small business owners spend on average roughly $83,000 a year to comply with government rules and regulations. That can be the margin between staying open or going bankrupt.
Donald Trump, was a staunch business owner who, once elected to the presidency, vowed to cut taxes and reduce the high cost of regulations with the intent of saving companies money and transferring some of that savings toward investment to grow business, create jobs and offer higher wages and benefits.
African American entrepreneurs must see these changes as an opportunity to take advantage of while they are in place, grow their business and use their prosperity to advance their economic mission.
Many of us are very concerned about the current administration’s moral values, social policy or personal misgivings, however the costs of permits, regulations and high taxes is the same if you are Black, Asian, Latino, Russian, American Caucasian or from Pakistan. It is incumbent on any business owner to recognize the tax cuts and lower regulations as a relief that may be temporary and a windfall to be saved for a rainy day, hire more employees or invest to boost profits.
The current administration began cutting rules as soon as it took over. The president slashed the total number of pages in the Federal Register, the government’s regulatory bible, from 95,894 in 2016 to 61,308 pages in 2017. This year it will go even lower. This is a big deal for businesses, which find themselves increasingly burdened by mandates, orders, rules and commands issued by Washington bureaucrats who know nothing about their companies.
The economy is often fickle and given that interest rates are rising, a recession is likely in the next few years, but for now less tax and red tape, potential trade gains means a 6-8% uplift in earnings. Fiscally conservative government leaders are right that tax cuts and wise deregulation can boost business competitiveness, however the corporate-tax cuts will partly expire after 2022.
Timing is everything. America’s negotiators are gunning for a five-year sunset clause in a new NAFTA deal which could strengthen buying power for American businesses, but only for a short period of time.
The value of tax cuts, deregulation and potential trade concessions from China outweighs the hazy costs of weaker institutions and trade wars.
Earnings of listed firms rose by 22% compared with a year earlier; investment was up by 19%. The Trump economy today is growing at just a nick below 3% a year. Median annual household income stands at $62,175 currently, the highest level since 2000.
Unemployment in June matched its lowest level in half a century because businesses are willing to play along with President Donald Trump’s home-brewed economic vision, in which firms are freed from the state and unfair foreign competition, and profits, investment and, eventually, wages soar. Black-owned business are no different and should consider this lighting in a bottle that may not come around again any time soon.