Grant Thornton conducted a pulse survey on the ongoing impact of the COVID pandemic and on how CFOs expect the 2020 election to affect their businesses.
A long wait for the new normal
A key finding? Most don’t expect the impact of the pandemic to fade any time soon. Almost 60% of respondents expect COVID-19 to continue to impact the economy and their businesses for at least another 12 months.
This doesn’t surprise Grant Thornton’s Chief Economist Diane Swonk. “The pandemic was once expected to be a short-term, transitory event. Now it is seen as longer lasting.” David Hazels, National Managing Partner, Advisory Services, agrees. “Businesses are realizing that they are in this for a longer haul. The key is being agile and adjusting quickly to conditions as they evolve and adapting to new realities like remote work and virtual customer connections.”
Uncertainty around taxes, regulations
When it comes to the post-election impact, CFOs see the most uncertainty in two key areas—taxes and regulation. Among surveyed CFOs, 60% expressed uncertainly about tax planning and 56% were uncertain about future regulations.
“The upcoming election will be pivotal for the future of tax policy. The two candidates have radically different visions for the tax code,” says Tax Managing Director Dustin Stamper. “The Tax Cuts and Jobs Act (TCJA) was one of President Donald Trump’s signature legislative achievements. An election victory would give him the opportunity to strengthen the bill by extending some of its expiring provisions. He could also pursue a payroll tax holiday or consider indexing capital gains to inflation, two ideas he has long favored.
“A victory for former Vice President Joe Biden could cause businesses and individuals to rethink their long-term and short-term tax planning. He’s running on an ambitious tax platform that would reverse major aspects of the TCJA, and could lead to increased tax rates on corporations, individuals and capital gains.”
The outcome of the election will also shape regulatory policy. “Transition to a new administration would mean a significant change in attitude toward regulations,” says Robert Shea, national managing principal for public policy at Grant Thornton. “President Trump has trimmed federal regulations significantly in the areas of the environment, banking, finance and others, and a second term would bring more of the same. A Biden administration will mean restoring and strengthening environmental regulations, as well as those directly impacting businesses, including around Dodd-Frank.”
Will the election mean support for onshoring?
During the pandemic, efforts to support supply chain reshoring have gained bipartisan support. Among respondent CFOs, 44% expect post-election legislative support for reshoring efforts.
“Legislative or executive efforts to support onshoring wouldn’t be a surprise no matter who wins the election,” says Jonathan Eaton, Supply Chain Management Growth Leader. “While the tenor and methods of managing trade would vary greatly between Trump and Biden administrations, COVID has helped build considerable bipartisan support for programs to stimulate reshoring, particularly in the life sciences and semiconductor industry sectors, where the pandemic has exposed significant supply chain weaknesses.”
How will the election shape expenses?
The following chart shows how the respondents anticipate expenses in various categories to change based on the results of the election:
The 2020 election will have far-reaching consequences for all businesses. After the electoral smoke clears, we’ll be back with more insights to help your business plan for 2021 and beyond.