Conservative economists are pouring cold water on the issue Vice President Kamala Harris‘ new proposal aimed at reducing start-up costs for new small businesses as part of his “Opportunity Economy” economic platform.
Last week, Harris unveiled new small business tax proposals aimed at reducing the cost burden associated with starting a new business. Among the proposals was a substantial increase in the standard tax deduction for small business start-up costs, from $5,000 to $50,000. “It’s basically a tax cut for starting a small business,” the vice president said during a campaign speech announcing the new proposal. “We’re going to help more small businesses and innovators get off the ground.”
Meanwhile, Harris has simultaneously expressed support for raising marginal tax rates for both corporations and individuals, which conservative economists say would work to diminish the benefit received by the poor. tenfold increase in the initial deduction.
“She wants to raise taxes on all types of income, on all income classifications, so that regardless of how the small business is ultimately structured, they’re still going to pay more,” conservative economist EJ Antoni told Fox News Digital. “Now, is that going to be reduced by this tax deduction increase? Absolutely. But then why do both? That doesn’t make any sense.”
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Antoni noted that under the Trump administration, standard deductions were increased and marginal tax rates were reduced. Also, under former President Trump’s administration, tax reduction measures, Small business owners were allowed to claim a deduction for their “qualified business income.” Ultimately, it will be up to Congress to decide whether or not to keep some of the expiring Trump tax cuts.
Trump spoke at the Economic Club of New York On Thursday, he laid out plans including cutting the corporate tax rate to 15% from the current 21%. Tax cuts in his first term previously lowered it from 35%.
“Harris wants to do the opposite [of Trump]“She wants to increase the deduction, but then increase the marginal tax rates,” Antoni said.
The economy consistently ranks as the most important issue for voters ahead of a presidential election.
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Robert Wolfe, a Harris supporter and former president of UBS Americas, a global wealth management firm, noted that the personal tax rate increase will only affect those earning more than $400,000.
“We want small businesses to be created,” Wolfe said. “And we know that the start-up phase takes time, so the idea that we wouldn’t applaud Small businesses and entrepreneurs “Getting tax credits doesn’t make sense to me.”
Richard Stern, director of the Heritage Foundation’s Grover M. Hermann Center on the Federal Budget, said that under current tax laws, new business owners can already deduct most startup expenses, such as payroll and equipment costs. defined in the tax code such as those costs incurred before a company registers with the federal government, which Stern says are typically quite minimal.
“Harris’s new small business tax credit is not a subsidy for starting a business per se,” he said. “It’s only helpful if you actually spend $50,000 on pre-startup expenses. So it’s a disproportionate subsidy for larger startups.”
Stern also agreed with Antoni’s view that Harris is essentially giving to small businesses with one hand, while taking away from them with the other.
Antoni, for his part, suggested that whoever is formulating economic policy for Harris’s campaign is “building the train as it rolls down the tracks.”
“It really seems like there are no pre-thought-out policy proposals and they are just winging it,” he said.
Vice President Kamala Harris helped create President Biden’s economic strategy known as “Bidenomics.” (Getty Images)
While right-wing economic experts argue that Harris’ latest tax proposal would be undermined by her plans to raise taxes in other areas and would do little to help inexperienced business owners start their first venture, Roger Hochschild, A Harris supporter and former CEO of Discover Financial Services says the move will be “crucial to driving further economic growth.”
“I think she’s very clear in her support for small businesses and recognizing that they are the backbone of the economy,” Hochschild said.
Rhett Buttle, a former adviser to Biden’s 2020 campaign, echoed that sentiment. He said the increased tax deduction demonstrates Harris’s “deep commitment” to entrepreneurs. according to NBC News.
“This is a broad-based issue for people from all walks of life,” he said. “Small business and entrepreneurship tend to be a great unifier in a world where people have very different political divides,” Buttle said.
In addition to Harris’ new tax proposals for small businesses, she also laid out her plan this week for tax capital gains. She wants to raise it to 33%, while Biden reportedly wants the current rate, which stands at 23.8%, to nearly double. according to The Wall Street Journal.
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A restaurant worker holds up a receipt with a note reading “Vote for Trump, no tip taxes,” signed by former President Trump at a sandwich shop in Philadelphia.
Fox News Digital reached out to the Harris campaign for comment on criticism of her small business tax proposal, but was only directed to a social media post from a small business owner speaking at a Harris campaign rally.
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“Do you think that you small business “Are you better off now than you were under the Trump administration?” NBC’s Gabe Gutierrez asked the businessman.
“Absolutely,” said entrepreneur Brad Smith. “And I think the reason has to do with optimism: If you’re a pessimistic candidate or president, you’re not going to start a business.”