The past few years have not been good times for small business owners in America. But hope is on the horizon.
President Joe Biden likes to say his economic policy is to build “from the bottom up and from the middle down,” but his policies have devastated small businesses, the engine of the American economy. It is giving a severe blow.
Small businesses account for nearly half of U.S. private sector employment. Since 1995, small and medium-sized businesses have created nearly two-thirds of new jobs in this country, and that proportion will continue to grow.
Unfortunately, the Biden-Harris administration is introducing costly new rules and regulations that are strangling many American small businesses and harming tens of millions of families who depend on them. I imposed it.
For example, in April, the Ministry of Labor announced unilateral changes to employment conditions for salaried workers. The Biden-Harris administration significantly increased the so-called “overtime threshold” from $35,568 to $58,656 in two steps.
For small business owners, this is like raising the minimum wage for salaried employees, but without the need for an act from Congress.
Starting January 1, salaried employees earning less than $58,656 must be treated essentially the same as hourly employees. Employers must track their time, calculate their wages on an hourly basis, and pay them time and a half for every hour they work over 40 hours a week.
That’s not how salaried employment should be. When a company hires an employee for a salaried position, that employee’s value is calculated based on the work they do, not the time they spend on it. This arrangement works well for both parties, so most hourly workers want to work for a paycheck.
Paying someone $50,000 a year is not the same as paying them $25 an hour, so effectively eliminating salaried work from a significant number of middle-income Americans means reducing the compensation of small business owners. It will influence how decisions are made.
Some employers raise salaries to avoid burdening management, but that means higher prices. Some companies convert salaried employees to hourly rates, but at reduced rates or reduced hours.
NEW YORK, NEW YORK – JULY 28: A “Help Needed” sign is posted in a Manhattan window on July 28, 2022 in New York City. The Department of Commerce announced Thursday that the U.S…. NEW YORK, NY – JULY 28: A “Help Needed” sign is posted on a window in Manhattan on July 28, 2022 in New York City. The Commerce Department said Thursday that gross domestic product (GDP) fell 0.2% in the second quarter. Two consecutive GDP declines have many economists worried that the United States could enter a recession. See more Spencer Pratt/Getty Images
The Biden-Harris administration also supported the Corporate Transparency Act (CTA), an Orwellian measure aimed at outsourcing national security and fraud prevention to the private sector.
An estimated 32 million businesses will be affected by the new law, and entrepreneurs and investors who fail to provide detailed personal information to the Treasury Department’s Financial Crimes Enforcement Network will face five-figure fines and, in some cases, financial penalties. A prison sentence is also imposed. Unsurprisingly, this hits small businesses harder than large corporations, which can employ high-paying lobbyists and provide large campaign contributions.
The CTA’s initial reporting requirements seem simple enough, stressing that the disclosure form only takes about 10 minutes to complete, but as always, the devil is in the details. If a small business “beneficiary” changes address, renews a driver’s license, or changes name, the business must file a new report within 30 days. Failure to do so can result in a fine of $500 per day and up to two years in prison.
Running a small business is difficult under the best of circumstances. Small business owners and their families make tremendous sacrifices, including working long hours without pay and sacrificing their own compensation, to keep their businesses afloat during those early, critical years.
Small business owners make these sacrifices because they believe in their dreams. But every time the government imposes more burdens on them, it becomes harder to achieve that dream and deters other would-be entrepreneurs from taking the risk in the first place.
Fortunately, Donald Trump’s campaign is proposing policies that will benefit small businesses and their employees.
Eliminating taxes on overtime pay, as President Trump has proposed, would create a huge incentive to increase productivity and boost the overall economy. Companies that are struggling to find enough workers will suddenly have no problem keeping them fully staffed as workers compete for overtime.
More importantly for small business owners who spend significant time cutting through government red tape, President Trump will remove 10 outdated and unnecessary regulations for every new regulation added. By doing so, they are trying to surpass the benchmark set by the previous administration.
Combined with the extension of the Tax Cuts and Jobs Act, America’s small businesses (and their employees) can expect to be in a stronger position than ever before.
The past few years have been tough for small and medium-sized businesses, but the situation may improve significantly in the near future.
Julio Gonzalez is the founder of Engineered Tax Services.
The views expressed in this article are the author’s own.
