It’s Election Day, and one of the most notable U.S. presidential elections and months of campaigning is at a close. In the coming hours or days, the U.S. will know its next leader.
Whoever is elected will face the unique and challenging task of helping the U.S. economy rebound after unemployment and volatility skyrocketed in the months since the pandemic.
Coronavirus and civil unrest have defined 2020, as will the results of the election. What follows is a final look at the proposed economic policies of Republican incumbent Donald Trump and Democratic challenger Joe Biden and which plan would be better for America.
Conflicting corporate tax plans
The two candidates’ views on corporate taxes have been studied carefully by small business owners, who have been historically active in presidential elections, according to CNBC.
Trump’s administration calls for keeping corporate tax rates low at 21%, and many businesses are hoping those low rates will continue for the next four years. When the Trump administration rolled out new taxation structures in 2017 many businesses restructured to be considered C-corporations, which taxes owners' and companies' incomes separately.
If Biden is elected and raises the rate to his planned 28%, businesses will re-evaluate and may consider switching designation to be most efficient with taxes. For context, the corporate tax rate was 35% since 1993 before the Republican-led Tax Cuts and Jobs Act (TCJA) of 2017 cut it 40% and 14 percentage points to 21%, though many corporations pay far less in federal income tax — or nothing, in Amazon’s case in 2018.
While conventional wisdom may be that President Trump's agenda is better for big businesses and the economy, Joe Biden's plan to stop COVID-19 could be better for the economy and investors.
Biden’s tax plans will affect corporations as well as wealthy American citizens. The most notable effects for the biggest American companies is his proposed seven percentage-point hike in corporate taxes. For wealthy Americans, Biden plans to raise the tax rate on capital gains to 39.7% from 37% for those who make more than $1 million annually.
Many Americans that would be impacted by Biden’s tax plan are already adjusting their portfolios and transferring their wealth to still be able to take advantage of Trump’s tax advantages. The aforementioned CNBC article also noted that entrepreneurs could be affected if they make more than $400,000 because of Biden’s payroll and Social Security taxes.
Supporting small businesses
As a wave of coronavirus ravages the U.S., Europe and much of the world, American small businesses continue to be hammered by lockdowns. Many business owners’ decision on who to vote for is up in the air and may directly impact the success or lack thereof of their businesses.
Biden plans to change the Paycheck Protection Program and provide businesses with less than 50 employees grants, not loans to keep afloat amid the economic uncertainties, according to his website. He also plans to make sure those who want to start a business are able to find reasonable amounts of capital, especially those people who don’t have immediate and easy access to funds required to run or maintain a business.
Small-business owners are also weighing the options Trump will bring in the next four years.
Because of Trump’s deregulations and tax plans, small business owners are likely to be incentivized by his position, as it opens the floor for a better business environment. In relation to COVID-19, Trump has been pushing to reopen the economy, which will aid small businesses battered by losses of revenue due to shutdowns.
Battle over trade war policies
Biden has called Trump’s tariffs against China “erratic” and “self-defeating,” according to his website. The former vice president also showed his disapproval of how the Trump administration has handled China by stating the increase of agricultural products purchases by China doesn’t sufficiently hold it accountable for the “illegal and unfair” economic practices.
If Biden is elected, tensions could again rise as Biden’s administration would continue the theme of the United States being critical of China and its actions.
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At the beginning of the year, Phase I of a trade deal was completed which marked one of the most significant events in the trade war between the world’s two largest economies.
As Phase II talks were about to begin, the coronavirus strangled the world in March and April, and now President Trump has heavily blamed China for the spread of the virus and not being transparent in January and February.
Because of this, Trump could return to tactics seen before when dealing with China by being aggressive and not flexible.
Perhaps the biggest issue of this year's election is the coronavirus pandemic that has hit the U.S. worse than any other country. The Trump administration has been criticized because of its perceived mishandling of the pandemic and failure to act early to distribute testing and resources when needed, despite its early jump on banning travel from China into the U.S.
Trump has largely downplayed the need for testing and social distancing guidelines, and much of the burden for imposing lockdowns has fallen onto the shoulders of local and state officials.
Since the United States first learned about the pandemic in Wuhan and throughout China, President Trump downplayed the effects of the virus coming out of China and said he was pleased with how China is handling the virus and was thankful for its efforts. He even said in late February it would disappear “like a miracle” and was the Democrats “new hoax.” He believed there would be 50,000-60,000 American deaths, but as he ran for re-election that number quadrupled.
Biden wants to nationalize the pandemic instead of letting the burden fall on local officials and increase the number of available tests while mandating mask-wearing in public, according to the Council on Foreign Relations.
Whichever candidate is elected will face a lot of pressure in the beginning as they’ll be coming off a holiday season where numbers of cases are expected to rise substantially. The U.S. saw a preview of that last week as new daily case counts hit all-time highs.
Andrew Withers is a junior finance major. Contact Andrew at firstname.lastname@example.org.