2020 ELECTION: HOW TRUMP AND BIDEN COMPARE ON THE KEY ISSUES THAT WILL IMPACT YOUR BUSINESS
Business leaders are constantly forced to grapple with uncertainty, it’s part of the job description. They must lead through challenging times with confidence, finding ways for their companies to survive and thrive—or face the consequences.
2020 has generated more uncertainty than any year in recent history and capping it off is a presidential election that has major implications for the future of business in the US and around the globe.
We’re highlighting 4 key issues and how they could potentially impact your business depending on which Candidate ends up in the Oval Office.
US CORPORATE TAX POLICY
During the first presidential and vice presidential debates, Joe Biden and Kamala Harris vowed to repeal the 2017 Tax Cuts and Jobs Act (TCJA), which President Trump passed with a Republican-controlled congress. The TCJA notably lowered the corporate tax rate from 35% to 21% and lowered the top marginal tax rate from 39.5% to 37%.
Trump’s traditional conservative approach to tax policy is not likely to change with a second term, so businesses can be relatively certain what tax changes are in store if he is re-elected. Already, the president has alluded to a potential new tax cut for middle-class Americans, but he has declined to give any specifics about this tax cut or his broader second term tax agenda.
If elected, Joe Biden has vowed toraise the corporate tax rate to 28% and raise the top marginal tax rate to39.6%, but he promises not to raise taxes on anyone making under $400,000 annually. Biden can only hope to make good on his campaign promises if Democrats also retake the Senate majority and maintain their position in the House this November. Senate Republicans aredefending more seats, so it is plausible for the democrats to retake the Senate, but neither party is expected to gain a strong majority, which might make parts of a Biden legislative agenda difficult to accomplish.
COVID – 19 PANDEMIC RESPONSE
The next President’s response to the global COVID-19 pandemic will have the most immediate and dramatic impact on the economy. The two candidates disagree on the best way to handle the pandemic. Joe Biden has pledged to enact a national mandatory mask measure, provide free COVID-19 testing, and vastly increase federal resources for state and local governments. Biden has made it clear that no options are off the table when dealing with COVID-19, and he is prepared to consider another national lock-down if necessary. This strong federal approach contrasts sharply with the Trump administration’s ongoing state-level policies to prevent the spread of the disease. The Trump administration largely believes that individual states are best equipped to create COVID-19 policy since the pandemic looks radically different around the country. The COVID-19 challenges faced by rural Wyoming are drastically different than states like New York, with dense metropolitan population centers.
Until a vaccine or effective treatment is found, the next administration will need to continue to pursue mitigation policies and stall for time until a major treatment passes human trials. Unfortunately, nobody knows when/if this will happen, so many businesses are left to assess the risk without direct guidance, which leads to market instability. No matter which candidate wins, clear communication is needed, so businesses can prepare for a prolonged economic slow-down or gear up when a vaccine is finally on the horizon.
Throughout his administration, President Trump has consistently been in favor of tariffs on Chinese goods. The tariffs implemented under Trump aim to protect American jobs and provide better leverage for negotiating a new trade deal between the two countries. From 2019 tariffs alone, the United States received $79 billion in tariff tax revenue, which is twice the amount from the previous year. By the end of 2019, the United States and China did reach a temporary tariff ceasefire to prevent further economic harm; however, the COVID-19 pandemic has stalled negotiations over the “phase two” deal, which the Trump administration indicates will tackle more complicated issues like China’s predatory trade and technology policies. Trump will likely continue to advocate for tariffs and a hard stance on China. If he is re-elected, the markets will need to be prepared to bear the long-term costs of his pro-tariff policies.
Experts generally agree that a future Biden Administration would take a softer stance on China. The former Vice-President has repeatedly spoken about his desire to work with China on issues like climate change and COVID-19, but his election campaign platform also includes rebuilding the American manufacturing sector. Biden will most likely lighten the tariffs in hope of improving diplomacy between the countries, but he will also continue some aspects of the Trump administration’s protectionist policies with the goal of protecting American manufacturing and intellectual property.
TECH AND DATA REGULATION
Regardless of the election outcome, it seems big tech companies will face more federal lawsuits and congressional probes in coming years. For his part, Trump has been outspoken against domestic big tech firms like Facebook, Twitter, and Google. He has also criticized foreign tech companies like Tik Tok and WeChat on national security grounds. Under his administration, the D.O.J. filed an antitrust lawsuit against Google in federal court this October. The suit alleges that the tech giant leverages revenue from Google’s massive online advertising business to pressure other technology providers like Apple to use Google as their primary search engine. The DOJ argues that this positive feedback loop is anti-competitive and suppresses new innovation.
Under President Obama, the administration was friendly with big tech and the D.O.J. declined to pursue antitrust action against big tech firms. Some critics worry that a Biden administration would pursue a similar course of action. The Biden campaign has made clear statements that they believe “many technology giants and their executives have not only abused their power, but misled the American people, damaged our democracy, and evaded any form of responsibility.”
Already, the Google lawsuit has proven to be a major force for the revitalization of Microsoft's rival platform, Bing. The internet is entering a new season, and online business interaction with clients and potential customers could drastically alter in the coming years.
Despite the uncertainty brought by 2020, we have witnessed and helped Business Leaders— our clients, colleagues, and friends—rally. They have led their companies through tumultuous times and will continue to strategize and transform their businesses to take on the future. No matter the election outcome, CASTUS can help position your business for success and drive long-term, sustainable growth in a constantly evolving business and political environment.