‘Punching up’: What happens when the Trump administration’s policies hurt workers and businesses?
This week, President Donald Trump signed a $1 trillion budget plan that aims to slash government spending, but it includes no new taxes on the wealthy.
Instead, the budget proposes to slash corporate taxes, boost investments in infrastructure, and provide tax relief to working families.
But how does that impact workers and companies?
In a recent study, the National Employment Law Project (NELP) looked at the impact of the budget proposal and found that the new budget proposal has the potential to hurt people working in blue-collar industries, including small businesses, retailers, restaurants, and small-business owners.
“For businesses, this budget would cut wages and employment,” said Michael Gerson, a senior policy fellow at NELP.
“It would also lower wages for workers who have to compete with foreign competitors in a global economy, and it would reduce the wages of the lowest-paid workers, who would have little incentive to work.
The budget would increase the costs of doing business for workers, particularly for the workers who need help to pay the bills.
This would make it harder for businesses to recruit workers.”
“The Budget would eliminate or reduce tax credits, which are crucial for businesses, and would cut taxes for the wealthy, including the estate tax,” Gerson continued.
“While the Trump budget would do away with most of the estate taxes, it would retain many other tax breaks, including a new $300,000 deduction for state and local taxes and a tax credit for child care expenses.
These tax breaks are designed to help small businesses to reduce their tax bills and are often used to offset payroll taxes, which would increase for many businesses.”
The budget proposal also would eliminate tax breaks for investments that pay for education, infrastructure, research, and research and development, according to NELp.
“These tax breaks would also be eliminated or reduced by a new corporate tax break known as the repatriation tax,” said Gerson.
“This tax break, which is a one-time, 15 percent deduction for corporate profits, has been used by companies to reduce the tax burden of their international operations.
As a result, companies are able to reduce expenses, hire more people, and boost their bottom line by repatriating profits.”
“It is hard to believe that President Trump and his budget director are willing to put the needs of small businesses first, especially when it comes to the middle class, when the economy is already in a recession and wages are stagnant,” said NELS Executive Director Daniel Wigdor.
“As an economy becomes more fragile and the government attempts to cut government spending and tax rates, small business owners are particularly vulnerable to these cuts.
These cuts will have a profound impact on small business and their workers, and we hope that President NEL will stand up for the interests of small business in the budget process and push for reforms that protect them.”
To learn more about the effects of the Trump Budget on workers and small businesses and how you can help, visit NELPs website.