Small-business owners tuning into Wednesday night’s Republican presidential debates no doubt left feeling sorely disappointed.
In two far-flung conversations among 15 candidates that spanned five hours at the Ronald Reagan Library in Simi Valley, California, with Reagan’s Air Force One in the background, the candidates scarcely mentioned small-business owners, and they paid only glancing attention to critical matters of the economy.
In fact, the earlier debate held for the four lowest-polling candidates--Rick Santorum, Bobby Jindal, George Pataki, Lindsay Graham--produced the most substance on matters affecting businesses, specifically on plans for rejiggering corporate taxes. Both debates produced some pretty general talk about altering the tax code to a flat tax. And a number of the candidates, including the night’s frontrunner, Donald Trump, said they’d eliminate the carried interest loophole currently enjoyed by private equity and hedge fund partnerships.
Here are four takeaways for business owners from the evening:
1. A special rate for manufacturers: Former Pennsylvania Senator Rick Santorum said he would cut the current top corporate tax rate in half, to 20 percent, which would also become the national flat tax. He would also create a special rate for manufacturers, starting at 0 percent and capping out at 20 percent, as a way to create more manufacturing jobs in the U.S. “We allow for expensing; we have a three year phase-in,” Santorum said. “You're going to see an enormous investment of capital and equipment…you're going to have problems finding folks [who] are going to be able to work in manufacturing. That's how many jobs we're going to create.”
2. Taxing hedge fund managers at a higher rate: Trump said he will be releasing his full tax plan in about two weeks. In addition to significant tax reduction for the middle class, Trump said that fund managers could expect to pay more. “The hedge fund guys won't like me as much as they like me right now,” Trump said. “I know them all, but they'll pay more.” Former Florida Governor Jeb Bush has also indicated he supports a higher tax for high-flying money managers. These candidates would eliminate the carried interest deduction, which currently taxes private equity and hedge fund profits on investments at the lower capital gains threshold, currently between 15 percent and 20 percent.
3. Raising the minimum wage: A number of candidates, including neurosurgeon Ben Carson and Santorum, said they supported raising the federal minimum wage, currently at $7.25. President Obama and other Democrats say they favor a federal rate of at least $10.10 an hour, a rate also stipulated by a recent executive order for federal contract workers. “We need to get both sides of this issue to sit down and talk about it,” Carson said. “Negotiate a reasonable minimum wage, and index that so that we never have to have this conversation again in the history of America.” For his part, Santorum would raise the federal minimum by just 50 cents, which would phase in over three years.
4. An exception for religious business owners: Sparked by the Supreme Court’s ruling allowing same-sex marriage in June, Louisiana Governor Bobby Jindal, Bush, and former Arkansas governor Mike Huckabee would pass legislation that lets religious business owners--and elected officials, such as the recently jailed Kentucky county clerk Kim Davis--to opt out of serving customers who offend their religious principles. Former New York Governor George Pataki made a forceful denunciation of such potential legislation. “There's a huge difference between an individual standing up and saying, 'I am going to stand for my religious freedom and my religious rights,'” Pataki said. “But when you are an elected official and you take an oath of office to uphold the law, all the laws, you cannot pick and choose or you no longer have a society that depends on the rule of law.”