Admittedly, most of the crystal balls used to prognosticate the 2016 election are sadly in need of repair or replacement. So attempts to dust off those crystal balls to peer into the future, as it relates to the next few years, have an analogous chance of accuracy. So what signs should entrepreneurs and innovators be looking for with the change in administrations?
Tom Sudow, the new director of the Burton D. Morgan Center for Entrepreneurial Studies at Ashland University, takes a stab at listing the five areas that will have the greatest impact. They are:
1. Taxes – It appears that attempts will be made to simplify the tax code. This could include: reductions in the numbers of individual tax brackets; the lowering of rates across all brackets; increases in standard deductions; lowering of the corporate tax rate to 15 percent; and a 10 percent rate on repatriation of foreign profits with the goal of bringing corporate “headquarters” back to the U.S. This lowering of taxes has the challenge of increasing the federal deficit, unless cuts in expenses can be found and/or increase in tax collections from more sources – like repatriated corporations and increases in wealth. For the entrepreneur, will these taxes breaks and simplification of the tax code allow for individuals and corporations to invest more money on innovation or with entrepreneurs? Will tax breaks continue for investors? And what, if anything, will happen to the capital gains tax? The theory remains that a lower capital gains tax promotes investment. Further, if more money is available will that encourage more investment?
2. Immigration -- Immigrants have provided significantly to the knowledge base economy. Many immigrants are also entrepreneurs – what is more entrepreneurial than taking the risk to leaving your home and resettle in a new country? Will a new immigration plan have exceptions for high-skilled immigration? Will that new plan have any provisions for immigrants who invest in this U.S. and can help grow the economy? What impact could new immigration legislation have the importing of innovation that have helped to stimulate the U.S. economy? What effect could it have on investment from international sources into U.S. entrepreneurs?
3. The Affordable Care Act – The repeal of the Affordable Care Act had been at the forefront of the campaign, if it is repealed (or sustainably changed), what replaces it? Donald Trump, during the campaign, called for a more free market system? How will this impact businesses and their employees? Further, for those in biomedical innovations, will that add money to health system or restrict even more? As, this could encourage or discourage the adoption of new innovations and new products. If fewer people have access to health insurance, will that mean less revenue for the healthcare organizations and thus a further tightening of their budgets and what effect will that have on the adoption of new products? Would new legislation include wellness and remote digital healthcare? If yes, this could open up opportunities for innovation?
4. Trade -- The trade issue reverberated in the Midwest and may have been a catalyst for the election. How will restrictions in trade impact U.S. products in the global market place? And how will it restrict high quality innovation from entering the U.S.? Could there be a backlash against U.S. companies trying to achieve a global market? Could a new trade policy restrict innovation from entering the U.S.? What impact could it have on collaboration between U.S. entrepreneurs and their counterparts around the Globe?
5. Regulation - The new administration has made a point, during the campaign, of suggesting the streamlining of federal regulations on business. This could open up opportunities for innovations and it also makes bringing innovation to the market simpler and less costly, depending on what areas the regulation reform is targeted. It will be important to track these changes and to understand how they impact, if at all, your business.
Being a few days removed from the election leaves us with many questions that during the next months and years will begin to be answered. As entrepreneurs and innovators, it is incumbent to stay on top of these issues and to understand how change affects your business. Additionally, to stay agile will be an important quality to have as you work to understand and adapt to change. A change in admirations brings uncertain and opportunity -- two words that true entrepreneurs thrive on.
Tom Sudow is the Director of the Burton D. Morgan Center for Entrepreneurial Studies at Ashland University and an Advisor to eHealth Ventures and to SCI , a Chinese investment group. He has worked with startups for 20 years and is frequently called upon to lecture on entrepreneurship, startups and technology.