Small business owners respond to tax plan changes

Written on Mar 28, 2018

In December 2017, sweeping tax plan changes were signed into law by President Trump. In a new survey by lendedu, 500 small business owners gave their thoughts on the tax plan changes.

The survey revealed that 64% of small business owners fully understand the impact of the tax plan changes and, more often than not, they are reporting increased financial and economic confidence as a result of the new plan.

The Tax Cuts and Jobs Act of 2017 is bringing changes to both individual and business tax returns. From the consumer perspective, the tax plan changes are relatively easy to understand. Thanks to the changes, the majority of American consumers have seen their paychecks rise. In February, lendedu found that the average American's monthly paycheck increased by $130.76 when the withholding tables changed.

The impact of the tax plan changes get a little more complex for small business owners who need to understand the changes to pass-through entities, "qualified" vs. "unqualified" business income, Section 179, the alternative minimum tax, and C-corp tax rates.

The eight-question survey was designed to gauge small business owner comprehension, confidence, and sentiment towards the tax plan changes.

Results summary

1. Do you believe that you fully understand the impact of the tax plan changes on your small business tax situation?

  • 63.60% of respondents answered "Yes"
  • 36.40% of respondents answered "No"

2. Do you believe that the tax plan changes will leave your small business better or worse off financially?

  • 34.40% of respondents answered "Better off financially"
  • 23.80% of respondents answered "Worse off financially"
  • 41.80% of respondents answered "Unchanged"

3. Do you believe that you fully understand the impact of the tax plan changes on your personal financial situation?

  • 66.60% of respondents answered "Yes"
  • 33.40% of respondents answered "No"

4. Do you believe that the tax plan changes will leave your personal financial situation better or worse off financially?

  • 36.20% of respondents answered "Better off financially"
  • 27.20% of respondents answered "Worse off financially"
  • 36.60% of respondents answered "Unchanged"

5. Which of the following best describes your small business' financial confidence as a result of the tax plan changes?

  • 39.60% of respondents answered "I am more confident in our financial future"
  • 26.00% of respondents answered "I am less confident in our financial future"
  • 34.40% of respondents answered "Confidence has not changed as a result of the tax plan changes"

6. Do you believe the Tax Cuts and Jobs Act tax plan changes will strengthen the economy?

  • 48.60% of respondents answered "Yes"
  • 22.80% of respondents answered "No"
  • 28.60% of respondents answered "Unsure"

7. Do the tax plan changes directly impact your sentiment about President Trump?

  • 32.80% of respondents answered "Yes, my sentiment has become more positive as a result of the tax plan changes."
  • 49.80% of respondents answered "No, my sentiment has not changed as a result of the tax plan changes."
  • 17.40% of respondents answered "Yes, my sentiment has become more negative as a result of the tax plan changes."

8. Which of the following best describes your feeling about the tax plan changes?

  • 27.00% of respondents answered "Very happy about the changes"
  • 21.60% of respondents answered "Somewhat happy about the changes"
  • 30.20% of respondents answered "Indifferent"
  • 13.00% of respondents answered "Somewhat unhappy"
  • 8.20% of respondents answered "Very unhappy"

The Tax Cuts and Jobs Acts appears to be creating financial optimism among small business owners. The survey found that 34.40% of small business owners believe their small businesses will be better off financially while 23.80% believe their small businesses will be worse off. Failure to understand the changes in large part led to 41.80% of small business owners who are unsure how they will be left financially.

Furthermore, 36.20% of small business owners believe their personal financial situations will be better as a result of the changes while 27.20% believe the opposite.

The plurality of small business owners, 39.60%, are more confident in their financial future. Again, failure to understand the changes in large part may have led to 34.40% of small business owners to have unchanged financial confidence.

The Tax Cuts and Jobs Act has been touted as a driver of economic growth. While the long-term economic impact is yet to be seen, the survey showed that 48.60% of small business owners believe that the tax plan changes will strengthen the economy, compared to the 22.80% of respondents who believe the opposite.

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