As we transition further from policies of the Obama administration to policies of the Trump administration, conservatives across Alabama readily await an expected (and much needed) resurgence in economic prosperity. The Obama administration dealt us an increase in both government regulation and government spending. With the help of tax and regulation reform, President Trump promises to achieve a four percent annual growth rate over the next decade(1). Whether or not his economic policies will achieve this rate is up for debate, but tax payers and small business owners across the state seem ready and eager for change. In fact, Alabama is experiencing a level of economic optimism not seen since 2005(2). Hopefully, over the next four years, Alabamians will see the benefits promised by the new administration. However polarized our two party system might be, most agree we are in need of some sort of tax reform. Currently, taxpayers fall under one of seven federal tax brackets.
President Trump intends to replace this system with a more simplified four-bracket system. Trump’s plan would exempt single filers making less than $25,000 per year and married filers making less than $50,000 per year from paying any federal income tax. Overall, this would relieve 73 million households from paying income tax. While many skeptics remain(3), the Trump administration assures that by closing federal tax loopholes for the wealthy, the proposal should more than pay for itself. As of 2015, Alabama’s median household income was $43,623, meaning a significant number of Alabama residents would fall under the 0% federal income tax bracket(4). This is great news for business owners across the state. With the level of savings Alabama residents expect to find, one would expect to see an increase in job growth and consumer spending as well. If all goes to plan, Alabama is poised to experience some real economic prosperity over the next few years. In order to facilitate the economic expansion mentioned above, President Trump has proposed a plan to control some of the unnecessary regulation implemented by the Obama administration. President Trump’s plan calls for a “Two-for-One” regulation cut. Under this policy, for every one regulation added, two would be removed. According to the White House, this policy should severely curtail the nearly two trillion dollars paid in regulation costs each year(5). This decrease in regulation should greatly help Alabama small business owners. According to the U.S. Small Business Administration (SBA), there are 390,000 small businesses in Alabama(6). Of these 390,000, a significant majority are Mom and Pop shops that can’t afford to cut through the red tape imposed by overregulation. For this reason, many ideas never get off the ground. Of the ideas that do, many business owners find themselves strangled by regulations, unable to hire new employees or pay the ones they currently employ. Undoubtedly, small businesses are the lifeblood of this country. In decreasing the stranglehold implemented through regulations, President Trump’s economic plan should pump some life back into our economy.
Of course, some regulation will still be necessary. We want our workers safe and our water clean. Businesses should still be held accountable if they operate irresponsibly. It is for these reasons that regulation exists, not to place undue burden on the American economy. So far, Trump has come through on much of what he promised on the campaign trail. Perhaps then we can anticipate him following through on his plans for economic growth as well. It would seem there is much for the American business owner to feel optimistic about. By means tax reform and regulation changes, we will hopefully see some real economic growth in the next few years, growth that many business owners haven’t felt in quite some time.
Written by Chris Simmons and Chris Reid. Mr. Simmons is a law student at Cumberland School of law and can be reached by e-mail at csimmon2@samford.edu. Mr. Reid is general practice attorney in Birmingham, Alabama. He has worked for republican leadership in the house in DC and was a health policy advisor to the governor of Alabama. You can contact him by email at chris.reid@reidlawalabama.com or by phone at 205-913-7406. For a full description of his practice area’s go to reidlawalabama.com. Our firm practices the following areas of law: wills, trust, and estates, divorce and family, DUI and drug offenses (only first and second time offenses), and car accident cases. We also handle business law, including formation of business entities and drafting contracts. Additionally, I co-host Yellowhammer News every Monday during lunch from 11-12 on 101.1 fm Birmingham (but our show is broadcast throughout most of the state).
Sources:
1. https://www.whitehouse.gov/bringing-back-jobs-and-growth
2. http://www.al.com/business/index.ssf/2017/01/alabama_business_leaders_optim.html
3. https://assets.donaldjtrump.com/trump-tax-reform.pdf
4. https://www.census.gov/quickfacts/table/INC110215/01
5. https://www.whitehouse.gov/bringing-back-jobs-and-growth
6. https://www.sba.gov/sites/default/files/files/resourceguide_2822.pdf