Politics and money go hand in hand—especially when it comes to elections. For a politician to get elected, they need two key things: money to fund their campaign and votes to win the seat. One of the most effective ways they secure both? The tax code.
When a politician offers tax breaks or credits to specific industries, it’s often a calculated move. These breaks typically lead to generous campaign contributions from lobbyists and industry insiders who want to see those tax incentives protected or expanded. On the other side of the coin, offering personal tax benefits—like mortgage interest deductions, childcare credits, or education tax breaks—helps curry favor with everyday voters.
These aren’t random acts of generosity. They’re strategic plays.
The Political Chessboard of the Tax Code
Every few years, especially during election cycles, you’ll notice politicians talking a lot more about taxes. Some promise to lower them. Others claim they’ll close loopholes. But often, what they’re really doing is signaling to specific groups: “We’ve got your back.”
For example, the mortgage interest deduction has long been popular with middle-class homeowners, and supporting this deduction wins politicians a lot of goodwill. Similarly, childcare tax credits appeal to working parents, while education credits speak to younger voters or families putting kids through college.
But the real winners in this game might not just be the voters—or even the politicians. If you’re a savvy entrepreneur, you can also win big.
Why Entrepreneurs Should Watch Politics Closely
Just like technological shifts (think AI or electric vehicles) can rapidly reshape industries, tax policies can do the same. A new tax credit for energy-efficient equipment might make it the perfect time to upgrade your HVAC system or solar panels. A deduction for research and development (R&D) could be your green light to finally build that app you’ve been thinking about.
Being politically aware isn’t just about watching the news—it’s about seeing how those decisions could put (or take) money out of your pocket. Staying informed allows you to plan better, time investments strategically, and even choose the right business model based on current and upcoming policies.
For instance, when the Qualified Business Income (QBI) deduction was introduced under the Tax Cuts and Jobs Act, it gave a significant 20% deduction to many small business owners operating as sole proprietors or pass-through entities. Those who were paying attention pivoted quickly to benefit. Those who weren’t? They missed out.
To stay ahead, you can track legislation through resources like Congress.gov or follow small business-focused news sites like NFIB.com.
Lobbying Isn’t Just for Corporations
You might think lobbying is only for big companies, but small business coalitions and trade associations often work behind the scenes to influence favorable policies too. By joining groups like the Small Business & Entrepreneurship Council (SBEC), you get access to insights and updates on legislation that could impact your business before it hits the mainstream.
When enough small business owners raise their voices or support a cause, politicians pay attention—because they want your vote too.
The Bottom Line
The tax code isn’t just a dry document your accountant reads once a year. It’s a living, breathing political tool. And if you understand how it’s used, you can use it too.
