5 Concerns Philly Business Leaders Have About the 2016 Election
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With seven days until the election, local business leaders and legal experts convened at the Union League on Tuesday to get final words in about the impact of the presidential and congressional elections on local businesses.
While the election is anxiety-inducing all around, what seems to concern Philadelphia business leaders the most is how presidential candidates Donald Trump and Hillary Clinton and senatorial candidates Katie McGinty and Pat Toomey might alter the tax code if elected.
While panelists at the event disagreed along political lines, they all agreed that it’s difficult to predict whether tax reform will even happen in the near future. And it’s also unclear exactly what reform will look like.
Here’s what they had to say about what matters now and what will matter once the victors take office:
1. The tax code is too complex.
Business owners want the government to simplify and clarify the tax code. “The Internal Revenue Code is over 74,000 pages alone,” said Kimberly Dula, a partner at the accounting, tax, and business consulting firm Friedman LLP. “Business leaders and taxpayers alike just want to be able to understand the tax system. They want to know what the changes are going to be, how the changes will affect them and they want to know early enough so they can plan accordingly.”
And according to Michael Greenwald, also a partner at Friedman, “Congress likes to meddle with the tax code because it’s good for politics.” The last time we had large-scale tax reform was in 1986, when they made major cuts, but then many things changed again the next year, he said.
2. None of the candidates has a finalized tax plan.
It’s difficult for businesses to fully align with candidates because their plans keep changing. “What was discussed in January is not what they are talking about now, and what they’re talking about now is not exactly what they’ll move forward with if elected,” said Dula. “The plans are also vague, so we have to look to how these candidates have voted before.”
“They’re politicians, and they’re putting out what will appeal to the base,” said Richard White, a partner at lobbying firm Thorn Run Partners.
3. Business owners care more about individual taxes than business taxes.
According to an online survey conducted by Friedman LLP of senior company leaders in the New York City metro area, New Jersey, and Pennsylvania, business owners care more about individual taxation than business taxation. According to the report, more than 60 percent of respondents were concerned about the elimination of the home-mortgage-interest deduction, compared with just 16 percent who said they care about that the changes to the partnership and S corporation tax systems.
4. State and local tax incentives for businesses matter more than ever.
Business leaders choose where to move their businesses based on state and local taxes. According to Friedman’s survey, 57 percent of respondents would consider moving their business based on state and local taxes. Owners are looking for more state tax incentives like tax credits for opening up shop in low-income areas, energy production and sustainability practices, increasing job creation, capital investments and cash grants, and property and sales tax relief, the report said.
5. Jobs shouldn’t go overseas.
“This is such a concern that candidates and business leaders from all sides agree that there’s a problem with businesses going overseas,” said Dula. “We’re all concerned with where jobs are going.” With Clinton interested in levying an exit tax and Trump aiming to make the business climate more attractive (by lowering the corporate tax, for example), business leaders say it’s still too soon to determine which proposal will be more effective.
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