By Jason Todd, IEC Vice President, Government Affairs
The November 5 election will, generally speaking, result in a positive change in policy for IEC. Below outlines my day after the election take on what a second Trump administration may mean for IEC.
Labor / Workforce Policy
During his first presidency, the Trump administration issued rules that largely benefitted or were supported by IEC. Many of those policies the Biden administration sought to overturn and/or modify to the detriment of IEC members. IEC would expect a second Trump administration to take steps to return these policies to the form for which they were initially enacted. Those include:
- Independent Contractor
- Overtime (the auto-escalation provision)
- Ambush Election Rule
- Joint Employer
It remains to be seen how the Trump administration will handle those completely new policy changes put in place under the Biden administration that IEC opposes. Many of those are being challenged in court, providing the opportunity to abandon defense of those issues being challenged in the judiciary. Among those are:
- Card Check
- Davis-Bacon
- Project Labor Agreement Mandate
- Walkaround Rule
- Noncompete Ban
Project Labor Agreements
It’s worth noting that during his first administration, Trump failed to revoke the Obama executive order (EO) that urged (not mandated) agencies to require project labor agreements on federal construction contracts over $25 million. The Biden administration expanded upon this EO by mandating PLAs for contracts over $35 million. IEC is hopeful a second Trump administration will be amenable to its demands to revoke this mandate once in office, though it’s possible it may want to wait for the judicial process play out to possibly avoid what it may view as a politically volatile issue.
Apprenticeship
Through executive order, Trump established the Industry Recognized Apprenticeship Program (IRAP). These programs would be controlled and developed more so by the private sector with limited involvement from DOL. The Trump administration ultimately kept construction out of the IRAP at the behest of the labor unions, largely due in part to his winning of rust belt states in 2016. The Biden administration ultimately revoked the IRAP completely. It’s possible for a second Trump administration to revisit the IRAP. If so, it’s an open question of how construction will get treated.
In addition, should the Biden administration release the final Apprenticeship rule, which is currently pending at its final stage, it’s unclear what position the new administration will take.
Lastly, when Trump took office the first time, he let the Advisory Committee on Apprenticeship (ACA), on which IEC serves, sunset. It’s possible the ACA would go away once more.
Labor Influence
It’s also becoming increasingly more difficult to estimate if a second Trump administration will govern like the first on the labor matters due to the political dynamics that were at play during the campaign. With Teamsters president Sean O’Brien speaking at the RNC at Trump’s behest, the Teamsters polling demonstrating a majority of its members appear to support Trump, and more talk publicly about courting the union vote, it’s possible for Trump to be more sympathetic to the union perspective on certain policies. Add to the fact that he’s also a lame duck, and his Vice President-elect, J.D. Vance, a populist who hails from a state with a significant union presence, all of which adds another layer of political uncertainty and complexity to predicting how a second Trump administration may handle labor policy.
Tax Policy
A second Trump administration will presumably be in favor of renewing, if not making permanent, all the provisions included in the Tax Cuts and Jobs Act (TCJA). Should Democrats take control of the House, this will make tax reform more challenging across the board from a business perspective. Regardless of whether it’s a divided Congress or not, virtually every tax policy will be subject to significant scrutiny and could get modified in some form or fashion during this debate.
Further complicating this discussion will be some of Trump’s recent campaign promises such as expanding the child tax credit, not taxing tips, overtime or Social Security, that weren’t part of the TCJA.
Additionally, a large portion of Congress was not around during the last tax bill and concern with increasing the federal deficit is going to be more of an issue than during the TCJA debate, regardless of who controls the House and Senate.
The Inflation Reduction Act (IRA)
Passed under the Biden administration, the IRA will likely be viewed as a potential revenue offset for tax reform. While it is likely to get amended some, it’s unlikely to be completely gutted.
The TCJA included a 20% deduction for qualified business income (QBI) on pass-through entities (partnerships, S corporations, and sole proprietorships). If this provision expires, the QBI deduction will revert to the pre-TCJA rules.
- This is IEC’s priority tax issue that expires at the end of 2025 since most of members operate as pass-throughs
- Not renewing this tax provision would mean a significant tax increase for the majority of IEC members
- IEC can only speculate that Trump would be in favor of renewing the 20% deduction as enacted in the TCJA
Estate and Gift Tax
The TCJA doubled the estate tax exemption to $11.2 million per individual (indexed for inflation). If this provision expires, the estate tax exemption will revert to the pre-TCJA level of $5.6 million per individual.
- Not renewing this policy means a tax increase on small businesses that are passed on to next of kin at the end of 2025
- Trump’s stated position is making this policy permanent, but the best-case scenario would seem to be an extension of the TCJA exemption
- IEC is in favor of this tax being eliminated completely, which is unlikely under the current political dynamics
Individual Tax Rates
9 out of 10 businesses in the United States pay through the individual side of the code
- Trump’s stated position of making this TCJA policy permanent
Capital Gains
- Trump would likely favor maintaining the current top rate (20%)
Conclusion
While the prospects for the merit shop under Trump’s second term are without question significantly better, it’s best to temper expectations that he will completely govern like a traditional, business-friendly Republican president as it relates to many issues that will impact IEC.
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