209 209BUSINESS BUSINESS JOURNAL JOURNAL
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JANUARY 2020 How Do Small Business Owners Feel About Minimum Wage Increases?
OPINION
SCORE and OnDeck surveyed small business owners across America on their thoughts about minimum wage changes.
43% of business owners
support a minimum wage increase. âIncreasing minimum wage would increase buying power for many and give considerable boost to the economy.â
âI feel if the minimum wage was more than it is now then people could afford to buy more, and if people were able to afford more then it would pass on to all or most businesses.â
Vol. 5 No. 1 â January 2020 39% do NOT support a wage hike.
PUBLISHER âPayroll is the biggest expense, when wages go up, so do taxes on those wages, so a minimum wage increase is a tax increase and a cost of living increase for all consumers.â
Hank Vander Veen
GENERAL MANAGER
âThe market should dictate wages not the government.â
Drew Savage 18% are not sure if they would support a higher minimum wage.
MANAGING EDITOR Sabra Stafford
Is the current minimum wage in your state:
NEWSROOM Dennis D. Cruz Kristina Hacker Teresa Hammond Angelina Martin Candy Padilla Vince Rembulat Virginia Still Dennis Wyatt
CREATIVE DIRECTOR Harold L. George
GRAPHIC DESIGNER Sharon Hoffman
SALES & MARKETING Chris Castro Lorraine Bernaldes Beth Flanagan Dawn Hamilton Corey Rogers Melody Wann Charles Webber Jennifer Webber
DIGITAL Frankie Tovar Rich Matheson
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209MAG A Z I N E.CO M
Tax law changes for 2020 Each year brings new changes to our Byzantine tax system, and 2020 is no different, with recent federal and state laws making the tax landscape more challenging than ever for small businesses and their owners. Here are some tax law changes you need to be aware of in 2020. Required Minimum Distributions From Retirement Plans. Probably the biggest federal tax law change last year was the Setting Every Community Up for Retirement Enhancement Act, or SECURE Act, which Congress passed in late December 2019. If you turn 70 1/2 after 2019, you can now wait until youâre age 72 to start making mandated annual withdrawals from your retirement accounts. If you turned 70 1/2 on or before Dec. 31, 2019, you are still required to take those mandated annual withdrawals now. For anyone who inherited an IRA from an original IRA owner who passed away prior to Jan. 1, 2020, no changes to your current distribution schedule are required. However, for situations where the original IRA account owner passes away after Dec. 31, 2019, fewer beneficiaries will be able to extend distributions from the inherited IRA over their lifetime. Many will instead need to withdraw all assets from the inherited IRA within 10 years following the death of the original account holder. Exceptions to the 10year distribution re-
CLIFF ENNICO CREATORS SYNDICATE
quirement include assets left to a surviving spouse, a minor child, a disabled or chronically ill individual, and beneficiaries who are less than 10 years younger than the decedent. Rolling Your Traditional or SEP-IRA Into a Roth IRA. If you are worried about required minimum distributions, or if you want to pass your IRA or SEPIRA on to your heirs free from the 10-year pay-down requirement, you should talk to your accountant about converting your IRA into a Roth IRA this year. You will have to pay tax on the amount converted as ordinary income, but subsequent earnings will be free of tax, and the decrease in tax rates that became effective in 2019 makes such a conversion less costly than it would have been in previous years. Of course, this option only makes sense if the tax rates when the money is withdrawn from the Roth IRA are anticipated to be higher than the tax rates when the traditional IRA is converted â a virtual certainty if the Democrats retake Congress in this yearâs election. Home Office Deduction. When the Tax Cuts and Jobs Act of 2017 eliminated the miscellaneous itemized expense deduction, it eliminated the ability of employees to deduct home office expenses. However, tax-
payers with their own business can still file a Schedule C and take a home-office expense deduction if part of the home is used for that business. State income taxes, property taxes and home mortgage interest allocable to your business can also be deducted. Such deductions are not subject to the limitations that apply to individual taxpayers who do not operate a Schedule C business from their home. Estate and Gift Tax Exemptions. The exemption from federal estate and gift taxes increases to $11,580,000 in 2020 when the annual inflation adjustment is taken into account. Amounts over the exemption levels that do not qualify for either the marital or charitable deduction are taxed at a flat rate of 40% at the federal level. Because the gift and estate tax exemption have been unified since 2011, this exemption can be used during lifetime or at death or some combination of both. Keep in mind that the 2017 tax that implemented the new exemption amounts is only in effect through 2025. Beginning Jan. 1, 2026, these exemptions will revert to their pre2018 levels ($5,000,000 indexed for inflation) unless further legislative action makes the changes permanent. With the 2020 elections on the horizon, there is always the possibility of a new tax law, which could result in a more rapid return to pre-2018 SEE TAX, PAGE 11
16%
40%
44%
Too High
About right
Too low
16% of owners think a minimum wage increase would POSITIVELY affect their business. âEmployees will be happier and although I may have to raise rates to cover increased wages, I would rather ensure my employees are happy and productive than worry about any perceived backlash from customers.â
55% feel raising rates would hurt their business. âIn order to provide wage increases to staff, cuts are being made elsewhere.â
Do you believe the minimum wage in your state is a "living wage"?
Yes
11%
No
73%
Not sure
16%
73% of owners do not believe the minimum wage is a âliving wageâ and it should be⌠âEvery employee should be able to meet his fundamental needs: paying his/her rent, transportation to go work, health insurance. The wealthiest country in the world should not tolerate poverty, and should put in place policies to improve people's lives.â
âŚbut some think the minimum wage should NOT be a living wage. âMinimum wage was never intended to provide for a familyâŚIt still serves a purpose for entry level jobs for high school students or for tasks that donât require additional skills or training.â
âThere should be tiers of min. wage for different type of work. A seasonal worker at a company⌠should be compensated at a different rate than a person who is a permanent worker.â
If the minimum wage in your state increased: ��
Would you raise other employee wages proportionately? Yes
37%
No
34%
Not sure
30%
Will you have to cut back on investments in your business?
Yes
44%
No
33%
Not sure
23%
How many full-time workers do you currently employ? 1-3
50%
4-6
11%
7-10
9%
11-20
5%
21-30
3%
31 +
2%
None
20%
How many part-time workers do you currently employ? 1-3
50%
4-6
10%
7-10
7%
11-20
5%
21-30
4%
31 +
2%
None
25%
What percentage of your employees are paid the minimum wage? 0%
58%
1-25%
19%
25-50%
5%
51-75%
4%
More than 75 %
14%
âI owned a small business for 30 years. I always paid my staff well above minimum wage. People deserve the right to live fair.â
www.score.org
Survey results were collected from 897 small business owner respondents via email in November 2019.