By Vice President Kamala Harris is set to unveil a bold economic proposal on Wednesday that could significantly impact new small businesses.
Harris will introduce a plan to increase the startup expense tax deduction for small businesses from $5,000 to a substantial $50,000.
This move aims to provide greater financial relief to entrepreneurs and draw a stark contrast between her economic policies and those of her Republican opponent, Donald Trump.
The proposed plan, to be announced during a campaign event in New Hampshire, represents a tenfold boost over the current allowance.
By expanding the deduction, Harris hopes to alleviate some of the financial burdens faced by entrepreneurs and stimulate the growth of small businesses, which are crucial to the US economy.
The Small Business Administration reports that the United States has approximately 33 million small businesses, which employ around 46% of all private sector workers and have been responsible for 70% of net new jobs since 2019.
Harris’s proposal also includes measures to streamline the process for obtaining occupational licenses and establish a small business expansion fund to support community banks in covering interest costs.
Will Harris be able to pass her tax-break proposal?
Despite these ambitious plans, Harris’ economic agenda faces potential obstacles. Both corporations and Congress might resist the proposed changes, especially since similar initiatives from President Joe Biden have been met with opposition.
Economic advisors for Trump, such as Kevin Hassett and Stephen Moore, have criticized Harris’ proposals, suggesting they could exacerbate inflation and harm economic stability.
With a crucial debate scheduled for September 10, where Trump and Harris are expected to clash on economic policies, the proposal will likely become a focal point of discussion.
Harris’s proposal also includes the flexibility for new businesses to spread out the $50,000 deduction over several years or delay claiming it until the business becomes profitable.
This added flexibility could make the benefit more accessible to startups at different stages of their financial journey.
However, there has been a history of issues with the IRS ensuring small business tax breaks reach the intended recipients, particularly during the pandemic when fraudulent claims surged.
The Harris campaign has not yet clarified which specific startups and small businesses will qualify for this expanded deduction.
25 million new small business applications
Additionally, Harris plans to set a goal of generating 25 million new small business applications during her first term if elected, a significant increase from the current numbers recorded under the Biden administration.
This proposal serves as a strategic countermeasure to Trump’s pro-business image, as he advocates for making his first-term tax cuts permanent and lowering the corporate tax rate.
Trump’s rhetoric often frames Harris’ policies as detrimental to economic growth, as seen in his recent statements on social media predicting worsening economic conditions under her presidency.
Harris’s proposal is part of a broader effort to address high living costs, including housing, groceries, and healthcare, which voters frequently cite as top concerns.
Her economic platform also includes a federal ban on “price gouging” in the food industry, a measure intended to tackle artificially inflated grocery prices.
However, this proposal has faced criticism from business groups and economists.
As Harris continues to build her economic platform, questions remain about how her administration would handle business regulation and antitrust enforcement.
Some Wall Street supporters anticipate a potentially more business-friendly approach compared to the Biden administration.
With the September 10 debate approaching, Harris’ new tax deduction plan could be a pivotal element in shaping voter perceptions and reinforcing her economic strategy.
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