3 Steps to Get Your Business Ready for Change in Washington

WASHINGTON SEEMS TO BE STUCK in a zero-sum political gamesmanship scenario for the foreseeable future. With so much noise on the left and the right, the governing middle has become pretty quiet and not much legislative activity is expected prior to the 2020 elections. At some point, though, something will change, whether in response to a crisis or single-party rule of Washington someday down the road. Here are a few things you can do today to prepare yourself for the inevitable change.

1. Meet Your Member of Congress

For most members of Congress, how much commercial equipment is leased or financed is not a front-of-mind statistic. Many have little appreciation for the role that our industry plays in the national economy. The percentage of awareness goes down dramatically if the elected representative is not on a fiscally focused committee and goes way up if they were recently elected. Members of Congress like touring businesses in their districts, and while manufacturing facility tours may make better pictures, they get just as much value out of meeting with senior leadership in a conference room or having a town hall with employees. Set up a meeting with your elected representatives today and tell them the role your company plays in the local and national economy.

Tell your elected representatives
the role your company plays in the
local and national economy.

2. Run Your Numbers

When tax reform was passed in late 2017, the authors needed several varieties of shoe horns to fit a size 15 foot into a size 12 shoe. Two of those mechanisms were central to the business of equipment finance. The first was a phase out of 100% expensing starting in 2023, reducing by 20 percentage points per year until it reaches zero.

The second was a change in the way adjusted taxable income is calculated for purposes of determining whether a business’s interest expenses are deductible or not. Starting in 2022 companies will no longer be able to add back depreciation and amortization when making this calculation.

The depreciation shoe horn is going to affect all business to varying degrees depending on how much personal property they depreciate in a given year. The interest deductibility shoe horn is going to impact companies that are already close to the 30% limitation and losing the ability to deduct a portion of their business interest. We are already hearing concerns about what happens when these provisions kick in. Now is the time to talk to your tax and accounting teams to figure out what impact these changes will have on your business. The outcome of this process is a great thing to discuss during the meeting you’ve scheduled with your member of Congress.

3. Vote (Twice)

If you want to shock a member of Congress, tell them you voted for them twice. The catch to the joke is that you must vote in the primary. General elections are like the Superbowl: Most people pay attention even if their team isn’t playing, but only one of two teams can win. Primaries are more like a regular season game, and other obligations can easily take precedence and cause you to miss the game, even if your favorite team is playing. Of course, the catch is that if you don’t win enough regular season games, you’ll never make the Superbowl. With congressional district lines being drawn the way they are, the outcomes of most congressional elections are usually predetermined by the primary results. So, if you care about who your member of Congress is, please vote in your primary elections, which will start in early 2020.