Donald Trump‘s first year in office may have been laden with controversy, political squabbling, and tweet storms, yet the reality-TV star turned U.S. president also managed to get a singular piece of legislation through that should loom large for businesses big and small for years to come.
With the passage of the Tax Cut and Reform Bill and its key business incentives for pass-through entities like LLCs and S Corps, small businesses should see their bottom lines balloon. According to an estimate from the Joint Committee on Taxation, the new 20 percent income deduction for pass-through businesses will reduce federal revenue by $415 billion for the eight years in which it is in effect. “It means that this provision is creating roughly $415 billion in savings for pass-throughs,” says Scott Greenberg, an analyst at the Tax Foundation, a conservative-leaning think tank in Washington, D.C.
Of course, not every policy Trump has spearheaded in the last 12 months will benefit businesses. Here are three ways Trump has changed your business, for better or worse.
1. Tax reform
Republican lawmakers achieved their largest legislative achievement of 2017 by passing a sweeping overhaul of the tax system in December. A key feature of the law involves the 20 percent deduction for pass-through income–that is, business income that is taxed at an individual tax rate instead of through the corporate tax structure. About 40 million taxpayers claimed pass-through income in 2014, according to data from the U.S. Treasury.
This tax plan isn’t without controversy: a Treasury Department analysis found that 69 percent of pass-through income goes to the top 1 percent of households, meaning it isn’t always benefiting small businesses.
Kyle Jensen, the associate dean and director of entrepreneurship at the Yale School of Management, says the tax cuts will have a greater impact on small-business owners–people who, say, run local construction companies–rather than emerging entrepreneurs who aim to become the next Mark Zuckerberg.
Trump’s move to ease regulatory burdens on businesses has been palpable, says Steve Kaplan, a professor of entrepreneurship and finance at the University of Chicago Booth School of Business. “There were all sorts of regulatory tentacles out there that, I think, demotivated a lot of small businesses,” Kaplan says. “You talk to people in small and large businesses, that burden being lifted has been a real positive.”
In the last year, Trump rolled back regulations on environmental protections, financial services, and health care, calling it the “most far-reaching regulatory reform” in U.S. history. Kaplan believes the changes are beneficial for large and small businesses, even if the public has mixed or negative reactions. He noted that this is especially true for the Environmental Protection Agency, where Trump has made the strongest effort to reverse Obama-era policies.
“Whether they go too far in deregulating, that remains to be seen,” Kaplan says. “Many small businesses would say they went too far on regulating.”
Additionally, the Federal Communications Commission voted in December to rollback Net Neutrality regulations that stopped broadband providers like Comcast and AT&T from blocking websites or charging for higher-quality service. While customers will not see potential changes immediately, Jensen says the repeal of Net Neutrality isn’t helpful for the economic growth of the country. He added that the growth of the country is dependent on startups, and the new rules will make it difficult for smaller companies to compete.
3. Immigration reform
Between the wall on the U.S.-Mexico border and the status of the undocumented young people who were brought to the country as children (known as Dreamers), immigration has been a major policy issue for the Trump administration. Trump started his presidency by issuing a travel ban on seven predominately Muslim countries, but it was quickly shut down by a federal judge in Brooklyn.
Then, in September, Trump ended the Deferred Action for Childhood Arrivals program, also known as DACA. While he has recently said that he’s open to a path to citizenship after 10 to 12 years for Dreamers, the future of those hundreds of thousands of people is still uncertain.
The Trump administration has also taken steps to make it harder for American companies to hire skilled foreign workers through the H-1B visa program. While the administration hasn’t made any changes to the law, there’s been an increase in the number of “requests for evidence” which are sent by the U.S. Citizen and Immigration Services department. These requests are a standard part of the process and ask the applicant for more information, but between January and November of last year, the U.S. Citizen and Immigration Services department issued about 40 percent more requests than in all of 2016, according to data from the department.
And that’s not good for business. “Anything we do to essentially make it more difficult for people, for talent, to come here, will impoverish us,” says Yale’s Jensen. He added that immigrants are more likely to start a company than native born people, in part because they don’t have the same access to the labor market. What’s more, Jensen believes American entrepreneurship will suffer if it’s difficult for people to come to the U.S.
“I think it’s a problem now, and we should be focusing on ensuring that we are as open as possible to the greatest people on earth,” Jensen says. “If you are a great and incredibly talented person, America should be bending over backwards to roll out the red carpet for you.”