Kamala Harris’ Promises for Small Businesses: A Detailed Look at How Entrepreneurs Stand to Benefit
When it comes to small businesses, Vice President Kamala Harris has shown a clear commitment to supporting entrepreneurs. With her sights set on the 2024 presidential election, Harris has outlined several policies aimed at promoting small business creation, removing financial barriers, and fostering a climate where businesses can thrive.
For small business owners and future entrepreneurs, these proposals could signal a shift in how they can navigate startup costs, taxes, and regulatory hurdles. Let’s break down Harris’ promises and what they could mean for small businesses in the years ahead.
Expanding the Small Business Startup Credit to $50,000
One of the standout points in Harris’ proposal is her plan to expand the small business startup credit tenfold, from $5,000 to $50,000. This would be a game-changer for entrepreneurs facing the typical $40,000 cost of launching a small business.
Currently, small businesses can claim a $5,000 deduction for startup expenses, but that doesn’t come close to covering the average costs associated with getting a business off the ground. Increasing the credit to $50,000 means that Harris is offering entrepreneurs significant financial relief that would make it easier to handle the initial overhead, whether it’s for marketing, legal fees, or securing a physical space. This could also make entrepreneurship more accessible to people from diverse economic backgrounds, potentially spurring innovation and growth across the country.
Claiming Startup Credit After Turning a Profit
Another crucial aspect of Harris’ proposal is her suggestion that businesses should be allowed to wait until they turn a profit before claiming their startup credit. This is particularly appealing for small businesses that typically operate at a loss in the early years as they reinvest their earnings back into growth. Instead of claiming the startup credit in the first year, when it may not provide much of a tax benefit, entrepreneurs could hold off and claim it once their business becomes profitable, significantly reducing their tax liability when they need it the most.
This flexibility acknowledges the long runway many small businesses face before reaching profitability. It empowers founders to strategically plan their taxes around their business’s actual financial trajectory. For entrepreneurs who are focused on growth, this policy could prove to be an invaluable tool for managing cash flow and reinvesting into their operations.
Setting a Goal for 25 Million Small Business Applications
Harris has also set an ambitious goal of 25 million new small business applications during her first term. By comparison, the Biden-Harris administration saw a record 19 million small business applications.
This goal aligns with her broader vision of an economy fueled by small businesses, which are often referred to as the backbone of the U.S. economy. Small businesses drive local economies, create jobs, and spur innovation. Harris’ goal reflects a belief in the potential of small businesses to strengthen the U.S. economy, especially after the disruptions caused by the COVID-19 pandemic.
Streamlining Regulatory Processes
For many small businesses, government regulations and red tape can be one of the biggest obstacles. Harris aims to cut through these barriers by reducing the bureaucracy that often makes starting and running a small business difficult.
Her plan includes developing a standard tax deduction for small businesses, which would simplify the tax filing process. This would be particularly helpful for entrepreneurs who often struggle with the complexity of tax compliance and may not have the resources to hire professional help. The proposal would reduce the time and money spent on tax preparation, allowing small business owners to focus on growing their operations.
Additionally, Harris is advocating for making it easier for businesses to obtain occupational licenses, which can be a major roadblock for entrepreneurs trying to expand into new markets. Her plan encourages state and local governments to relax these regulations, creating a more entrepreneur-friendly environment.
A Lower Capital Gains Tax
Another significant component of Harris’ small business agenda is her stance on capital gains taxes. Unlike President Biden’s proposal for a 39.6% capital gains tax rate for those earning over $1 million, Harris is advocating for a lower 28% rate. While this is still an increase from the current 23.8% rate, it’s a more moderate approach that reflects Harris’ belief that encouraging investment leads to economic growth and job creation.
For small business owners, this could have a direct impact. A lower capital gains tax rate would incentivize investors to put money into startups and small businesses. Therefore, striking a balance between generating government revenue and encouraging private investment supports the growth of small businesses while ensuring that wealthy individuals still pay a fair share in taxes.
Incentivizing State and Local Governments to Support Small Businesses
Harris also plans to incentivize state and local governments to relax regulations that can stifle small business growth. While federal policies can create a supportive environment, many of the rules that small businesses must follow come from local or state governments. Occupational licenses, zoning laws, and other regulations can vary widely across the country, sometimes making it difficult for businesses to expand or even get started.
With these incentives to states and local governments, Harris aims to create a more uniform and less restrictive landscape for small businesses. This would allow entrepreneurs to navigate regulations with greater ease and reduce the barriers to scaling their operations across different regions.
Other Policies to Support Small Businesses
In addition to her small business-specific proposals, Harris has outlined several other policies that could benefit entrepreneurs indirectly. These include:
- Building more affordable housing, which could reduce living expenses for entrepreneurs and their employees.
- Banning price gouging in the food industry, which could benefit food-related businesses and small restaurants by keeping ingredient costs in check.
- Cutting taxes for most Americans, which could put more money in the pockets of consumers, boosting spending at small businesses.
Conclusion: A Promising Future for Small Businesses
For instance, a tech startup could use the expanded startup credit to invest in research and development, while a small restaurant could benefit from the ban on food industry price gouging. These policies could create a more favorable environment for small businesses to start and succeed.
While some of her policies, such as the capital gains tax increase, may raise concerns for wealthier investors, the overall impact of her proposals would likely be positive for small business owners across the country. However, it’s important to note that some critics argue that the proposed tax increases could discourage investment and potentially slow economic growth. For entrepreneurs, Harris’ plan represents a shift towards a more supportive and flexible framework that could help them navigate the challenges of starting and growing a business in today’s economy.
If implemented, Harris’ promises could mark a new era of growth and opportunity for small businesses, laying the foundation for an economy driven by innovation and resilience.
Frequently Asked Questions
1: How will Kamala Harris’ proposal to increase the small business startup credit impact new entrepreneurs?
Kamala Harris proposes to expand the small business startup credit from $5,000 to $50,000. This would provide new entrepreneurs with a larger financial cushion to cover initial expenses, such as marketing, legal fees, or securing a workspace. A higher credit makes it easier for people to start businesses, particularly those who may not have access to large amounts of capital. This expansion is designed to encourage innovation and entrepreneurship across diverse economic backgrounds.
2: What is the significance of businesses being able to claim their startup credit after turning a profit?
Under Harris’ proposal, businesses would have the option to wait until they become profitable to claim their startup credit. This is significant because many small businesses operate at a loss in their early years. As such, deferring the credit until they turn a profit helps businesses better manage their tax liability during a time when they’re earning revenue. This flexibility allows entrepreneurs to strategically plan their finances and get the most benefit from the tax credit when it matters most.
3: How will Harris’ plan to lower the capital gains tax affect small businesses and investors?
Harris proposes a capital gains tax rate of 28% for individuals making over $1 million, which is lower than the 39.6% rate in Biden’s plan but still an increase from the current 23.8%. This lower rate would encourage investment in small businesses and startups, as investors would still have favorable tax conditions for supporting growing companies. Striking a balance between increasing revenue for the government and promoting investment aims to provide small businesses with greater access to capital, which is critical for growth.
