What the GOP tax bill means for businesses

Summary

Marketplace Morning Report: What the GOP Tax Bill Means for Businesses

Release Date: June 13, 2025

In this episode of the Marketplace Morning Report, host David Brancaccio delves into the implications of the GOP’s proposed tax bill on businesses. The discussion covers a range of topics from global market fluctuations influenced by geopolitical tensions to the specific provisions of the tax legislation and its impact on small and medium-sized enterprises (SMEs).

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Global Market Turmoil Amid Israel-Iran Tensions

The episode opens with a brief update on the volatile global markets influenced by escalating tensions between Israel and Iran. David Brancaccio reports significant declines in major stock indices and a surge in oil prices following Israel's attack on Iran's nuclear facilities.

“Germany's DAX stock index is down 1.5%. Dow and S&P futures are both down 1.1%, and Nasdaq futures are down 1.4%. The Vix index... is up 16% overnight.”
[01:14] – David Brancaccio

Stuart Clarkson of the BBC provides further analysis, highlighting that oil prices have surged by over 10%, reaching levels not seen since January. The uncertainty surrounding the conflict has traders concerned about potential disruptions in oil supplies from the Middle East, which accounts for about 30% of the world's oil.

“A barrel of West Texas Intermediate... is now trading at $75, 9% higher.”
[02:00] – Stuart Clarkson

Impact of Immigration Policies on American Businesses

Shifting focus to domestic issues, the report addresses President Trump's comments on immigration and its effects on industries that rely heavily on immigrant labor, such as agriculture and hospitality. Nancy Marshall Genzer reports on the backlash from business owners facing ICE raids targeting their workers.

“Our very aggressive policy on immigration is taking very good long time workers away from them, with those jobs being almost impossible to replace.”
[03:06] – Nancy Marshall Genzer

Trump acknowledges the strain immigration policies are placing on these sectors but remains non-committal about making specific changes. The American Farm Bureau Federation appreciates the acknowledgment but warns of potential supply chain disruptions reminiscent of the pandemic era.

GOP Tax Bill: Enhancements and Controversies

The core of the episode centers on the GOP’s proposed tax bill and its ramifications for businesses, particularly SMEs. David Brancaccio introduces Kimberly Adams, Marketplace's senior Washington correspondent, who provides an in-depth analysis of the bill.

“Businesses came out on top in this bill.”
[05:49] – Jeff Brabant, National Federation of Independent Business

Key Provisions:

1. Increase in Expensing Limits:

   • The bill proposes to double the cap on full and immediate expensing for equipment from $1.25 million to $2.5 million.

   “Congress wants to double that to two and a half million dollars, which we think is a really good thing.”
   [06:13] – Jeff Brabant

2. Permanent and Expanded Pass-Through Deduction:

   • Currently set at 20%, the deduction would be raised to 23% and made permanent.

   “The top 1% of small businesses are reaping 50% of the benefit coming from that deduction.”
   [07:08] – Jeff Brabant

Criticisms and Potential Drawbacks:

While the tax bill offers significant benefits to larger small businesses, critics argue that it disproportionately favors the wealthiest within the small business sector. Additionally, the bill includes major spending cuts that threaten existing green energy tax credits, potentially harming small businesses in the renewable energy sector.

“Credits for solar to support solar installation... this bill would just about immediately terminate them.”
[08:00] – Michael Negron, Small Business Majority

Kimberly Adams notes that while the House has put forward the current version of the bill, the Senate is still deliberating, leaving room for modifications based on stakeholder input.

Economic Impact Analysis by the Congressional Budget Office

Concluding the discussion, David Brancaccio references a fresh analysis by the Congressional Budget Office (CBO), which presents a stark contrast to Republican claims. The CBO report indicates that the tax bill would significantly benefit the wealthiest households while adversely affecting the poorest.

“The mega bill would take $1,600 a year away from the poorest households while increasing the income of the wealthiest households by an average $12,000 a year.”
[08:34] – David Brancaccio

Republicans, including Treasury Secretary Scott Besant, dismiss the CBO’s findings, arguing that not passing the bill would be catastrophic. However, the data suggests a growing income disparity influenced by the proposed tax reforms.

Closing Remarks

David Brancaccio wraps up the episode by emphasizing the ongoing negotiations in the Senate and the potential for the tax bill to undergo significant changes. The discussions highlight the delicate balance between fostering business growth and ensuring equitable economic benefits across different income groups.

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This comprehensive analysis provides listeners with a clear understanding of the GOP’s tax bill, its intended benefits for businesses, and the broader economic implications as assessed by various stakeholders and analysts.

Transcript

[David Brancaccio]

Hey there and thanks for listening. We want to know more about our audience. Stick around at the end of this episode to hear about how you can help, provide feedback and have a chance to walk away with a $75 gift card.

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[David Brancaccio]

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[David Brancaccio]

[e-mail] Terms we have stocks down and oil prices spiking given Israel versus Iran. I'm David Brancaccio in Los Angeles. After Israel launched attacks on Iran's nuclear capabilities, open warfare in the region is forcing money to shift on financial markets. Right now, Germany's DAX stock index is down 1.5%. Here, Dow and S and P futures are both down 1.1%. Nasdaq futures are down 1.4%. The Vix index of stock market volatility for the US is up 16% overnight. Iran is the seventh largest producer of crude oil in the world, equivalent to Iraq, and just ahead of the UAE and Brazil. Here's Stuart Clarkson with our partners at the BBC.

[Stuart Clarkson]

Global oil prices surged by more than 10% shortly after news broke of the attacks, reaching levels not seen since January. A barrel of West Texas Intermediate, the key benchmark for US oil, is now trading at $75, 9% higher. The European benchmark Brent crude is also at $75, around 9% up. Traders are concerned that a conflict between Iran and Israel could disrupt supplies coming from the energy rich region. The Middle east accounts for about 30% of the world's oil supply and a fifth of it travels through the Strait of Hormuz, which borders Iran. The cost of crude oil affects everything from how much it costs to fill up your car to the price of food at the supermarket in the UK. I'm the BBC's Stuart Clarkson for Marketplace.

[David Brancaccio]

Right now, oil traded in New York is just above $74 a barrel, again the highest since late January. President Trump is acknowledging that the toll immigration rates are having on some industries that rely on immigrant workers, specifically food supply and hotels. Yet it's not clear if he will alter the workplace sweeps and deportations. Marketplace's Nancy Mar Genzer reports farmers and.

[Nancy Marshall Genzer]

Business owners are complaining about ICE raids targeting their workers. Trump acknowledged that yesterday in his social media post he singled out the hotel and leisure business, which of course would include his hotels and golf courses. In the post, Trump said farmers and hotel and leisure businesses have stated that, quote, our very aggressive policy on immigration is taking very good long time workers away from them, with those jobs being almost impossible to replace. The American Farm Bureau Federation issued a statement yesterday saying it appreciated Trump's comments, adding that without those workers there is a risk of supply chain disruptions similar to those experienced during the pandemic. Trump said changes are coming, but wasn't specific. And later yesterday, Trump resumed more aggressive posts about immigration, saying people here illegally should either self deport or quote, ice will find you and remove you. I'm Nancy Marshall Genser for Marketplace.

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[David Brancaccio]

Comb through the evolving big package of tax cuts and spending being worked out by Republicans in the Senate to try to align with what came out of the House of Representatives, which been exploring effects on households. But today, businesses. Let's bring on Marketplace's senior Washington correspondent, Kimberly Adams. Morning, Kimberly.

[Kimberly Adams]

Morning, David.

[David Brancaccio]

Now, remember, Congress made the tax cuts for corporations, as opposed to individuals, for corporations, permanent in that 2017 law. So what's in this reconciliation package for businesses?

[Kimberly Adams]

Quite a bit, especially for small and medium sized businesses. I spoke with Jeff Brabant, who's vice president for federal government relations at the National Federation of Independent Business, and he told me he really feels like businesses came out on top in this bill.

[Adam Grant]

For example, right now, the cap on full and immediate expensing for equipment for.

[Jeff Brabant]

Small businesses is one and a quarter million dollars.

[Adam Grant]

Congress wants to double that to two and a half million dollars, which we think is a really good thing to.

[Jeff Brabant]

Encourage small business owners to invest in new equipment, buy a new tractor if you're a farmer.

[Kimberly Adams]

But the big win, says Brabant, is making what's called the pass through deduction permanent and expand.

[David Brancaccio]

You're the best, Kimberly, because you're going to try to explain the pass through deduction, how does it work and what does the GOP want to change?

[Kimberly Adams]

So if you're a business that's a sole proprietorship and LLCs or some partnerships in S Corps, you pay your business's taxes at personal income tax rates, which are much higher than what corporations pay. So the 2017 law gave an extra deduction for those businesses. But a lot of people have complained that it doesn't really help small businesses that much. Richard Trent is executive director of the small business advocacy group Main Street Alliance.

[Jeff Brabant]

So the initial numbers on this are that the top 1% of small businesses are reaping 50% of the benefit coming from that deduction. So this is a small business deduction that cost about $800 billion, the vast majority of that benefit going to the largest small businesses in the country.

[Kimberly Adams]

Right now that deduction is 20%. But this bill would make it permanent and boost it to 23%.

[David Brancaccio]

All right. Now, Republicans want to make major spending cuts to help partially pay for the tax cuts. But how might some of those cuts affect businesses?

[Kimberly Adams]

Lots of different ways. So for example, this bill threatens many of the Inflation Reduction act or green energy tax credits. And Michael Negron with the group Small Business Majority and a senior fellow at the center for American Progress gives this example of possible impact of that there.

[Adam Grant]

Were credits for solar to support solar installation. There were small businesses that made a living out of essentially marketing those tax credits and going to homeowners or going to businesses. Same goes for energy efficient home improvements. And this bill would just about immediately terminate them.

[Kimberly Adams]

Of course, this is just the House version of the bill we're talking about. The Senate is working through it and hearing from lobbyists and constituents. So things could change.

[David Brancaccio]

All right. Marketplace's senior Washington correspondent, Kimberly Adams. Never afraid of getting into the nitty gritty. Kimberly, thanks.

[Kimberly Adams]

You're welcome, David.

[David Brancaccio]

A fresh analysis by the Congressional Budget Office finds the mega bill would take $1,600 a year away from the poorest households while increasing the income of the wealthiest households by an average $12,000 a year. Middle income households would see between 500 and $1,000 extra, while the lowest income households make too little to pay. Income tax cuts to SNAP food stamps and new, tougher rules for Medicaid would be drivers of the decrease. Treasury Secretary Scott Besant and other Republicans downplay the non partisan CBO's work, suggesting not passing the bill would be catastrophic. In Los Angeles, I'm David Brancaccio. This is the Marketplace Morning Report from APM American Public Media.

[Adam Grant]

Hi, I'm Adam Grant, host of the podcast Rethinking, a show where I talk to some of today's greatest thinkers about the unconventional ways they see the world. On Rethinking, you'll get surprising insights from scientists, leaders, artists and more. People like Reese Witherspoon, Malcolm Gladwell, and Yo Yo Ma. Here are lessons to help you find success at work, build better relationships and more. Find Rethinking wherever you get your podcasts.