How a Trump presidency will affect our businesses is the question on everyone’s mind these days. To stimulate some thought on the subject, here’s what we know about a few areas of particular concern to the equipment rental industry:
Infrastructure – The prospect of increased spending on infrastructure excites many, including equipment rental business owners who see the promise of rising rental revenue as a result of more construction. Over the course of his campaign, Donald Trump proposed $1 trillion in infrastructure spending over 10 years. Initially, the plan offered $137 billion in tax credits to attract private investors to buy into revenue-generating infrastructure projects. Currently, Trump’s website cites a more modest proposal for $550 billion focused strictly on transportation infrastructure for only a five-year period. Trump insiders now indicate the President-elect is weighing a combination of taxes, bonds, regulatory changes and a national infrastructure bank as finance mechanisms.
Either way, Trump's infrastructure plan is sure to be met with opposition from a beleaguered Congress still recovering from a bloody fight to pass a five-year highway bill just last year. As a result, the prospect of significantly increased infrastructure spending leading to more rental revenue in the near future is tenuous.
Immigration - Policy reform in this area seems very likely, although Trump’s proposal to deport undocumented workers has some business owners concerned as the U.S. labor shortage is already nearing crisis level. Many construction-related businesses worry that having even fewer potential workers to fill a growing number of positions will drive wages up to a level that’s unsustainable, particularly for many small business owners.
Some experts argue that a strict immigration and deportation policy would result in greater demand and higher wages for American citizens. That increase in pay would come at a time when construction-related businesses - including equipment rental companies - are already raising wages to attract skilled workers. Bottom line: Expect to pay your employees more.
The wall – Regarding immigration, estimates show that Trump’s controversial, 1,954-mile-long concrete wall between the U.S.-Mexico border would cost approximately $25 billion and take 16 years to build. With the amount of national resources needed to make it a reality, and the logistical challenges associated with building across such challenging terrain, this proposal seems the least likely to come to fruition, yet it remains a primary item on Trump’s agenda. If it ever does get underway, higher taxes seem unavoidable.
Regulatory reform – The Trump administration has promised to take a pro-employer stance when it comes to regulatory reform, a position that has been embraced by many business owners. As such, we can expect to see attempts to roll back several of Obama's initiatives, including the proposed overtime rule, which would roughly double the salary that employers have to pay before their workers aren't automatically eligible for overtime.
Trump continues to voice intentions to tackle the Affordable Care Act (Obamacare) first and foremost. Whether this means full repeal as indicated during his campaign or significant reforms is anybody’s guess at the moment, as his position continues to shift. Regardless of the specific strategy, Trump can expect a lengthy and difficult battle as Democrats in Congress will surely place major obstacles in his way. For better or worse, however, it's safe to say Trump's overall political philosophy will translate into less government intervention in American business.
Taxes - Trump’s plan primarily focuses on reducing income and corporate tax rates. Those with incomes above $225,000 will have to pay 33 percent, much lower than the current rate. The plan would also lower the corporate tax rate from 35 percent to 15 percent. This could be a great gain to our economy which continues to struggle in its recovery from the recession, as a lower corporate tax rate might allow companies to expand, invest in new jobs or provide higher wages.
Despite the potential benefits such a plan could reap for businesses and the American people, it's too soon to tell. Some experts think Trump's tax plan is little more than a campaign tool and that he's unlikely to repeal most tax breaks for businesses, as his plan presently states. At the end of the day, he has a long way to go in proving his intentions go beyond rewarding himself and his own kind. Time will tell.
So will a Trump presidency help your rental business or hinder it? It remains a question and one which we don’t think even Mr. Trump has the answer to. While we maintain optimism for what promises to be an era of sweeping change, one thing is certain: We must stay informed and speak up. It’s never been more important.
