Business leaders are applauding Vice President Kamala Harris’ plan to boost small businesses, but advocates say it foreshadows a larger fight over the tax code.
On Wednesday, Harris announced policy proposals which aim to catalyze small business growth and create more room for maneuver on their balance sheets through a variety of mechanisms, including expanding the tax deduction for start-up expenses from $5,000 to $50,000, removing barriers for owners and their employees to obtain or transfer professional certifications, and launching a fund for community banks to expand entrepreneurs’ access to capital.
“All of that would be beneficial,” said Sherman Kyse, chef and owner of Dem Dam Burgers, a restaurant based in Biloxi, Mississippi.
Courtesy of Sherman Kyse
But others in the small business community are looking ahead to next year with concern, measuring how the assumed profits from Harris’ proposal would compare to those lost if deductions under the tax law signed by former President Donald Trump were applied. will expire at the end of next yearWhether Harris or Trump wins, they will likely face an uphill battle to pass tax code changes in a potentially divided Congress.
Meanwhile, during a Thursday’s speech In a bid to sharpen his economic policy, Trump has once again promised to cut tax rates for businesses and corporations.
Richard Trent, executive director of the Main Street Alliance, said Harris’ proposal addresses many of the organization’s 30,000 members nationwide in economic concerns, but also looks ahead to 2025.
“This is just the beginning of what we must do to ensure that local economies and small business owners are protected in an environment where corporate consolidation has made our country’s largest companies more powerful than ever,” he said. For example, he wants to see an expansion of Small Business Administration cash grants to make less-well-off entrepreneurs more competitive.
Eager for a boost
For his part, Kyse, who said he plans to vote for Harris, said the extra money from the upfront deduction could help support payroll, better contracts with food distributors and warehouse space — a $70-per-month expense he has so far avoided.
“My dad’s shed is completely full of restaurant equipment,” he added.
His business has been faced with some tough decisions lately. Despite coming in second place in a major local newspaper as the best burger in the world, Kyse, 43, said rising food prices and price-wary customers have forced him to scale back both his restaurant and his menu items, which include pastas and seafood nachos. Since 2020, he has closed three other locations on the Mississippi Gulf Coast.
Revenue for 2024 is about $257,000, he said, down from $360,000 at this time last year.
“I’m in the process of restructuring my menu so you can see the cheaper items on the price side,” said Kyse, who said this is his 30th menu revamp. For the most recent version, after hearing feedback that some items were too expensive, he went so far as to copy prices from Five Guys’ menu, “and nobody said anything.”
Two months before her Election Day showdown with Trump, Harris is rushing to lay out more details of her economic agenda. Her proposals for small businesses come after plans to build millions of new homes and a pledge to crack down on food price gouging.
Rhett Buttle, a lobbyist and organizer and former economic adviser to both President Joe Biden and Harris, said the proposal shows Harris’s “deep commitment” to entrepreneurs. He also said it was a clear overture to Republican states, and highlighted her promise to expand the State Small Business Credit Initiative, which was created with Biden administration funding. American Rescue Plan and that “Republican governors love,” he added.
“There are broad brush strokes here that apply to 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.”
Deficits and deductions
If Harris wins, it will be important for many in the business community to see how her agenda fits with parts of the tax code that property owners and entrepreneurs already support, including provisions that became law under the Trump administration.
Brad Close, president of the National Federation of Independent Business, highlighted the popularity among business owners of Trump’s 2017 law that allows them to deduct 20% of your qualified business income “If the deduction is allowed to expire at the end of next year, millions of small businesses will face a massive tax increase,” he said.
The call The transfer deduction has been criticized as one of the most expensive parts of the tax code, with initial estimates projecting a deficit of 414.5 billion dollars The policy would extend beyond 2025 and cost the government $684.2 billion through 2034, according to the Joint Committee on Taxation, according to the Congressional Budget Office. foundLast month, the nonpartisan Penn Wharton budget model said Trump’s overall proposals Increase deficits five times more than Harris would.
Harris’s small business plan is the latest example of the fine economic line she has had to walk since her rise to the top of the ticket: appealing to a broad swath of moderate voters using populist policies aimed at taxing the wealthiest Americans to spur wealth creation among the poorest.
Charlotte Chaze, 33, doesn’t need much persuading. She already plans to vote for Harris, and the recent nomination includes a series of financial wins for her two-year-old company, BreakIntoTech, which sells video courses for professionals to become certified in data analytics.
A bigger tax break would help Chaze expand his staff beyond the four he currently has. And he applauds Harris’s plan to impose a 28% tax on long-term capital gains — lower than Biden’s 39.6% proposal but still higher than the current 20%.
“As a small business owner who is very successful but doesn’t make enough for the capital gains policy to affect me or my company, that policy will help transfer wealth away from people who have more than they could spend, meaning more people will be able to afford my product,” said Chaze, who added that he has resisted raising prices along with competitors. “It’s just good karma to believe in people over profits.”