Small business confidence has declined to an all-time low following the win of former Vice President Joseph Biden, according to a survey.
The Q4 CNBC|SurveyMonkey Small Business Survey shows that 54% percent of small business owners expect Biden’s tax policy to affect their business in the next 12 months. Meanwhile, 49% believe government regulation will have a negative impact on them. The divide is stark in terms of party affiliation.
Data shows that among Republicans, 75% said tax policy will be negative and 72% said regulations will be negative. Those figures fall to 15% (taxes) and 11% (regulations) among Democrats. These are considered the biggest percentages cited for the “negative impact” response in the four years of the survey.
The SurveyMonkey platform queried more than 2,200 small business owners nationally. However, around 60% of small business owners identify as Republicans.
“The immediate shift in forward-looking sentiment that small business owners reported following the election reveals how deeply politics has become embedded in the public’s assessment of the economy, and in particular how divided the country is,” said Laura Wronski, research science manager at SurveyMonkey.
“We’ve seen evidence of that every quarter, with Republican small business owners consistently reporting a higher degree of confidence than Democrats, but the election of Joe Biden is the first opportunity we’ve had to see whether that would flip if presidential power changed parties — and it did dramatically,” she said.
Among Republican participants, the small business confidence index score dropped from 57 in the third quarter to 42; among Democrats, confidence rose from 46 to 58. The lowest previous confidence reading from Republican entrepreneurs was in Q2 2020, at 54.
Findings indicate that 34% of small business owners believe President-elect Joe Biden will be good for small business, while 55% think otherwise. By party, 89% of Republican small business owners say the new president will be bad for business, while 86% of Democrats say he will be good for Main Street.
Wronski explained that part of the small business confidence being evaluated every quarter is owners’ evaluation of what conditions will look like a year from now based on policy reforms done at the federal level. The questions are surrounded by uncertainty in any post-election period, before the new administration officially governs and before their policy agenda is fully implemented.
“We don’t yet know how Biden will work with Republican leaders to carry out his agenda, and we don’t even know what his specific policy proposals will be yet, so we’re really in wait-and-see mode, and that lack of certainty is always a tricky situation for small business owners to operate in,” she said.
“If we do indeed end up with a Republican-controlled Senate, many feel that this is a win-win scenario,” said Tony Nitti, a federal tax partner at RubinBrown, who works with many entrepreneurs. “Clients viewed the election as a bit of a ‘Sophie’s Choice’: they preferred the stability and potential pandemic response of a Biden presidency, but wanted the tax regime of a Trump second term. With these results, there’s a bit of a ‘best of both worlds’ feel,” Nitti said.
“In a divided government scenario, and the way things are shaping up in the House, it will be very difficult to raise taxes, and especially so on small businesses,” said Karen Kerrigan, president, and CEO of trade group Small Business & Entrepreneurship Council. “The House margins will be so tight with respect to majority control.”
