A recent New York Times survey of over 10,000 Americans found that Trump’s tax plan now has more supporters than opponents. 51% of Americans approve of the law while 46% disapprove. Previous to this survey, many Americans were skeptical of the plan – 60% of Americans were initially worried the plan would simply favor the wealthy.
Now, however, the paradigm has shifted positively, leaving many experts wondering why. One probable explanation is that many businesses announced bonuses and raises as a result of the tax savings incurred due to the Trump tax plan. Income perception has increased in positive relation to support of the tax bill.
Whether or not the bill delivers on the promise of more income is yet to be seen. The effects of increased income perception, however, are actually really good for small business.
When people believe they are making more money, they tend to spend more money. This was especially true during the 2017 holiday season. As income perception has only increased since then, It’s likely expenditures will also increase this year. Increased expenditures mean boosted business profits.
Due to changes in deduction laws, many small businesses will also be able to deduct more expenses. On automobiles, for example, businesses can take an $18,000 deduction for a new car during the first year they own it. Newly-purchased SUVs and trucks are 100% deductible.
Businesses who are wise in their management of extra funds from the Trump tax plan will be able to build credit. Building credit will be crucial for businesses who want to establish themselves as viable candidates for business loans. As big lenders are getting more stingy and less receptive to new ideas, it’s becoming imperative for small businesses to go to great lengths to secure funding.
The practices of big lenders opened a gap for innovative marketplace lenders and other alternative lending companies to offer competitive loan agreements at higher acceptance rates. With the Trump tax cuts putting more money in pockets, these scrappy lenders will be able to secure more funds for small businesses.
“Small businesses are going to see more savings and more money in their pockets,” says Brad Close, a senior vice president for public policy at the National Federation of Independent Businesses. Things are looking good so far – let’s hope they stay that way.