Presidential Candidates' Tax Proposals and Potential Impacts on Business Owners

As we edge closer to the 2024 presidential election, the tax proposals of leading candidates become crucial for business owners, especially those contemplating transitions or exits. Each candidate has given at least a hint at some of the legislative moves on their radar. Here's a deeper dive into each candidate’s position.

Joe Biden

President Joe Biden's approach suggests a willingness for compromise going forward, likely resulting in incremental tax policy changes. Biden's policies are expected to maintain the status quo with slight adjustments, offering a stable but slightly more taxed operating environment.

Biden's 2024 budget proposal indicates he wants the corporate income tax rate to increase to 28 percent and raise taxes for the fossil fuel industry.

Business owners might see a modest increase in income taxes and a potential for targeted adjustments, such as expanding childcare tax credits. And while Republicans have floated a $100 million estate tax exemption, Biden's stance suggests less likelihood of such a large provision.

Lastly, income taxes under Biden might see a modest increase, particularly affecting high earners and potentially altering the landscape for charitable deductions.

Donald Trump

Former President Donald Trump intends to reinstate his first-term tax policies and cuts, likely lowering individual tax rates and maintaining the 21 percent corporate income tax rate made permanent in the 2017 Tax Cuts and Jobs Act.

Other Trump-era policies passed in the 2017 tax bill have ended or are set to expire soon, including the estate tax portion, which doubled the amount of an estate's value that's exempt from the estate tax from $11 million per couple ($5.5 million per individual) to $22 million per couple ($11 million per person). Trump has indicated he wants those exemption levels extended or even made permanent.

It's worth noting the House recently passed bipartisan legislation that would restore some business tax benefits, including the ability to deduct certain research expenses and relaxing limits on the deductibility of interest expenses for companies with significant debt. The Senate has yet to vote on the bill.

Robert F. Kennedy Jr.

The first two candidates we've discussed have been or are presidents, so their policies are more predictable. Robert F. Kennedy, Jr.'s tax proposals are less documented, making it challenging to assess their direct impact on business owners.

Kennedy has made statements that corporations should "pay their share" but has not provided concrete tax proposals. He has, however, made bold statements about crypto, proposing Bitcoin be exempted from capital gains tax.

Given his political pedigree and activism, policies favoring environmental sustainability and possibly regulating industries like crypto more strictly could emerge.

Nikki Haley

Nikki Haley's tax stance leans towards reductions, particularly for small businesses and individuals, mirroring a traditional conservative approach. She has also spoken out against what she calls, “corporate welfare.”

On the campaign trail, she voiced support for the 2017 tax bill and indicated support for making the small business tax cuts in the legislation permanent.

Haley has also expressed support for eliminating the federal gas tax and child tax credits for everyone.

Key Takeaways

As with any election season, business owners should prepare for potential shifts in tax legislation, especially concerning estate taxes and qualified small business incentives. Given the varied approaches of the candidates, adopting a flexible planning strategy that can adjust post-election is wise.

For those concerned with estate tax liabilities, exploring avenues like philanthropy or strategic reallocations could mitigate future tax burdens independent of the election outcome.

Business owners also need to think about sustainability. While a Republican administration might offer short-term tax relief, the public and fiscal policy pendulum could swing back, necessitating a balanced, long-term perspective on business and personal financial planning.

As the campaign progresses and more detailed proposals are unveiled, business owners should stay informed, consult financial advisors, and consider the broader implications of each candidate's tax policies on their transition strategies. The goal is to navigate the changing fiscal environment effectively, ensuring a prosperous future for their enterprises and we’re here to answer any questions.