The Greater Flagstaff Chamber has been invited to share in this space what鈥檚 going on in the business world, and we are always grateful for the opportunity.
Unlike the chicken and the egg, employers always come first. Without employers, commonly referred to as job creators, there are no job opportunities for potential employees. Following suit, as employers do well, so do employees. As we head toward the end of Q2 2025, it is important to look back and assess what has transpired this year.
First and foremost, the new administration has ushered in a tremendous breath of fresh air on regulatory policies. The regulatory overreach of the previous administration via federal department regulations and new agency rules was unprecedented, and thankfully, many of those regulations and rules targeting employers were successfully defeated in court. A friendly regulatory environment is crucial for American employers to thrive and grow, and we remain hopeful for continued progress in this arena.
Conversely, we have seen the administration use increased tariffs on imports, which in turn results in retaliatory tariff policies from foreign nations. We have voiced our concerns alongside the U.S. Chamber to the administration about the short-term uncertainty varying tariff policies create for our local businesses, as well as long-term impacts including supply chain disruptions and lessening demand for our member products and services. We understand clearly the need for better border security against human and drug trafficking with our Canada and Mexico partners, and the administration鈥檚 wish to reduce foreign trade deficits and grow our U.S. manufacturing base again -- all great for America. That said, we stand for growth, and reasonable trade agreements get us down the road to economic expansion sooner rather than later.
Finally, and most important at this time, the U.S. House Ways and Means committee recently completed important work on tax legislation that will be taken up by the full House of Representatives and the U.S. Senate in coming weeks and months. Opponents decry the work as 鈥渢ax cuts for the rich,鈥� but that criticism is not only old and tired, it is completely false. Here are a few important tenets of this work:
- No Tax on Tips - establishes a temporary tax deduction equal to qualified tips received through 2028
- No Tax on OT 鈥� establishes a deduction equal to the 鈥渜ualified overtime鈥� received through 2028
- Deduction for Seniors 鈥� for 鈥�25 through 鈥�28 the standard deduction is increased by $4,000 for individuals over 65
- Child Tax Credit 鈥� set to increase from $2000 to $2500 per child for 2025 through 2028
- Tax Rate Extension 鈥� extends the 2017 Tax Cuts & Jobs Act (TCJA) tax brackets set to expire in 2026, this maintains a top rate of 37%, preventing a tax increase or reversion to the old pre-2017 rate of 39.6%. Other rates set to increase on TCJA expiration in 2026 stay current.
- SALT 鈥� the state and local tax deduction increases from $10,000 to $30,000 for most
There are also key tax elements for Qualified Business Income (QBI), 1099-K limits (raised from $600 to $20,000 -- on Venmo, PayPal, Etsy, transactions etc.), accelerated depreciation, increased estate and gift tax exemptions, and more.
The proposed tax package will undoubtedly see adjustments moving forward, but for the good of the order, we are hopeful a majority of these items are realized as law before the end of summer.
This good work is not uncoupled. Simultaneously, the House Energy and Commerce committee has been tasked with reducing federal government spending by nearly a trillion dollars. Currently, the federal government spends roughly $6T while barely taking in $4.5T, which has led to a ballooning of the federal debt to over $36T. The inflationary environment created under the former president has led to massive increases in federal interest payments on our debt, straining our economy.
Serious fiscal management is in order in Washington, D.C. Unfortunately, DOGE鈥檚 tremendous findings of waste, fraud and abuse in the federal government system will not be enough and reductions in increased federal spending in future years must be achieved.
As the sausage-making process grinds on in Washington, we will continue to advocate for fiscal sanity and policies that create healthy economic environments for Arizona businesses and oppose policies that deter business and employee growth.