Did You Know?
“The 2025 Presidential Transition Project is the conservative movement’s unified effort to be ready for the next conservative Administration to govern at 12:00 noon, January 20, 2025.”
Chapter 22 of Project 2025, which begins on page 691, focuses on the specific recommendations to reorganize and refocus the Department of Treasury. Chapter 15, beginning on page 503, proposes significant reorganization of the Department of Housing and Urban Development (HUD).
Who Wrote It?
Project 2025 is more than just a policy blueprint. It includes robust recruiting, vetting, and staffing components designed to fill roles to begin implementing the policy initiatives on “day 1.” It is important to identify the authors of the agency chapters, as they are the people likely positioned to take leadership roles at the same Federal agencies they are writing about, and to intentionally implement these recommendations as part of the upcoming administration.
William L. Walton, host of The Bill Walton Show, is the former Chairman of the Board and CEO of the private investment firm, Allied Capital Corporation; and is the immediate past President of the Council for National Policy.
Stephen Moore is a senior economist at FreedomWorks, the libertarian policy group that recently shut down after an ideological split with the Trump campaign. He is also a Distinguished Fellow at The Heritage Foundation, and a Fox News analyst.
David R. Burton is the Senior Fellow in Economic Policy at The Heritage Foundation. Previously, Burton was General Counsel at the National Small Business Association; and manager of the U.S. Chamber of Commerce’s Tax Policy Center.
Benjamin S. Carson, Sr., MD, is the Founder and Chairman of the American Cornerstone Institute and previously served as the 17th Secretary of the U.S. Department of Housing and Urban Development.
Department of Treasury:
Anti-Money Laundering Reporting (AML): The document recommends reforming the AML and beneficial ownership reporting systems to “reduce compliance burdens. This new rule went into effect at the beginning of this year which requires businesses to file a report identifying a “beneficial owner” as an individual who owns or controls at least 25 percent of a company or has substantial control over the company, and a “company applicant report” which names the person who files the document that creates or registers the company. The intent of this filing, which was a part of the Corporate Transparency Act (CTA), is designed to fight the illicit use of shell companies created by Russian, Chinese, Cartels, and others to launder money. To do so, a whole range of small businesses (totaling approx. 35 million) now must register with FinCEN who their “beneficial owner” is (i.e., people who own 25% or more of the company or substantially control its decisions). While Project 2025 claims that the recommendations are aimed to make it easier for small enterprises to manage regulatory requirements without undue administrative costs, for most small businesses this would only be a one-time filing with FinCEN.
Tax Reform for Small Business Growth: Treasury’s role in tax reform includes ensuring that small businesses benefit from lower taxes and simplified filing processes. The proposal includes a number of provisions that would be significantly advantageous to small and minority business owners who are able to effectively utilize the new structures:
- Two-Rate Individual Tax System (15% and 30%) – Simplifies the tax code into two rates making it easier for business owners that are sole proprietors (e.g. S-corporations; individually owned LLCs, etc.) or are taxed at the individual rate.
- Reduced Deductions, Credits, and Exclusions: The proposal eliminating most deductions, credits, and exclusions may negatively affect small businesses that rely on certain deductions to offset costs. Minority-owned businesses that depend on specific tax credits, such as those for hiring in disadvantaged areas, may face increased tax liabilities.
- Corporate Income Tax Rate Reduced to 18% – A significant benefit for larger firms, the proposal would lower the corporate income tax rate to 18%, generating significant benefit to small businesses structured as corporations by reducing the overall tax burden on profits, thus creating opportunities to expand operations, hire employees, and enhancing business sustainability and creating new opportunities. However, in exchange, the proposal would eliminate most deductions, credits, and exclusions which may negatively affect small businesses that rely on certain deductions to offset costs. Minority-owned businesses that depend on specific tax credits, such as those for hiring in disadvantaged areas, may face increased tax liabilities.
- Immediate Expensing for Capital Expenditures – Currently set to expire in 2025, this would allow the immediate expensing of capital expenditures, incentivizing companies to invest in new equipment and technology. Immediate expensing has been a useful tool, particularly for small firms aiming to improve cash flow by providing deductions upfront.
- Universal Savings Accounts (USAs) – Similar to Roth IRA’s, these accounts would allow business owners to save and invest their post-tax earnings with tax advantages where gains from these accounts would be non-taxable;
- Increased Business Loss Limitation – Provides an opportunity to write off higher losses, up to $500,000, which would benefit small businesses that are in the early stages of growth and may incur losses.
- Net Operating Loss Carry Forward – Allows businesses to fully carry forward net operating losses, enabling them to offset future profits and reduce tax burdens in better-performing years; and
- Repeal of Inflation Reduction Act (IRA) Taxes – Repeals taxes such as the Corporate Alternative Minimum Tax, which requires corporations with over $1B pay a minimum 15% tax rate, and the stock buyback excise tax, which applies a 1% tax on corporate stock buybacks to encourage reinvesting profits in productive activities versus simply increasing shareholder returns.
Capital Access and Investment Programs. Treasury would refocus programs, such as the Small Business Investment Company (SBIC), to support small businesses across various sectors, not just technology startups. While this is intended to ensure small businesses in manufacturing and capital intensive industries have improved access to funding, it would significantly reduce the amount of capital available to promote the growth of small and minority owned businesses in the industries of the future that are heavily technology-driven.
Department of Housing and Urban Development (HUD):
The proposed reforms to the Department of Housing and Urban Development (HUD) outlined in Project 2025 claim to focus on reducing bureaucratic overreach and promote self-sufficiency. Yet, they also promote conservative social-design methodologies that carry risks of exacerbating housing instability, increasing inequality, weakening fair housing protections, and overburdening local governments. Provisions, such as privatizing public housing or shifting housing decision-making from the federal government to the states, could have lasting negative consequences for vulnerable populations, local economies, and housing markets.
Shifting Housing Program Functions transfer many HUD functions to other federal agencies, states, or localities, reducing HUD’s role in administering housing programs. While the “decentralized” model allows state and local governments more flexibility in designing and implementing housing policies based on local needs, this could result in a significant decline in affordable housing and inequitable enforcement of anti-discrimination laws. This devolution could weaken federal oversight and standardization of housing assistance, leaving it to state and local authorities to determine eligibility, funding, and implementation strategies for housing programs.
Privatization of Public Housing recommends the potential sale of public housing stock, shifting ownership and management from the public sector to private entities. It also shifts from federally-owned public housing units to voucher-based systems like the Housing Choice Voucher (Section 8) program, thereby reducing the direct role of HUD in managing public housing while increasing reliance on private landlords and market-based solutions for low-income housing needs.
Limiting the Scope of HUD’s Role in Housing Development: Limits HUD’s involvement in constructing new affordable housing or managing public housing portfolios and relies more on private sector development and management of housing units.
Encouraging Localized Solutions for Housing Assistance: Allows local governments to pursue housing policies that reflect their own priorities, without interference from federal programs or mandates – including prohibitions on discrimination against minorities, people with disabilities, or other protected classes.
Eliminating or Scaling Back Specific Federal Housing Programs: Project 2025 proposes to repeal programs like the Housing Supply Fund and reducing the use of federal mandates such as Affirmatively Furthering Fair Housing (AFFH) and other civil rights protections. This could reduce oversight of discriminatory housing practices, reduce federal ability to increase housing supplies, and further shift decision-making to the private sector.
Roll back equity-driven policies: The weakening of fair housing enforcement and the rollback of regulations aimed at promoting diversity and equity in housing and development projects could further exacerbate existing inequalities in the contracting process. As a result, minority-owned businesses, particularly those in construction, maintenance, and housing services, may struggle to maintain their foothold in the market under the proposed reforms.
Conclusion
Overall, Project 2025’s proposed policies could lead to reduced support, increased competition, and greater economic challenges for minority-owned businesses. The elimination of affirmative action and minority-focused programs, combined with broader deregulation and changes to labor laws, may potentially create a more challenging environment for these businesses to thrive and compete. The proposal includes plans to abandon affirmative action and minority contracting programs that have historically provided critical opportunities for minority-owned businesses to compete for and secure government contracts. The attack on regulatory protections for minority businesses would remove protections that help ensure fair competition and prevent discriminatory practices.
Specifically, the proposals to reform the Department of Treasury and HUD could have profound negative impacts on minority communities and minority-owned businesses by reducing federal oversight, reducing the corporate tax rate which disproportionately benefits large firms, weakening fair housing enforcement, rolling back regulations aimed at promoting equity, and exacerbating existing economic and social inequalities. Minority communities would face increased housing instability, diminished upward mobility, and greater exposure to discriminatory practices. For minority-owned businesses, particularly those in construction, housing services, and other industries tied to federal contracts, the shift toward privatization, reduced government support, and the elimination of affirmative action programs could lead to fewer opportunities, increased competition from larger firms, and greater economic vulnerability. Overall, the proposed changes will unfortunately deepen disparities and hinder the economic progress of minority groups across the country.