Vice President Kamala Harris has unveiled a new tax proposal aimed at bolstering the nation’s small businesses, a key focus of her campaign for the 2024 presidential election. The plan, which is expected to be detailed in a speech in New Hampshire on Wednesday, seeks to significantly increase the federal government’s small business tax deduction, potentially offering substantial relief for entrepreneurs.
Harris’ proposal would raise the existing tax deduction from $5,000 to a hefty $50,000, a tenfold increase designed to offset some of the financial hurdles associated with starting a new business. Her campaign argues that this move could help reduce the estimated $40,000 cost burden many new ventures face. Furthermore, the proposal would allow small businesses to delay claiming the deduction until they become profitable, allowing them to strategically utilize the benefit to maximize savings in the future.
Beyond the tax deduction, Harris also outlined a plan to increase the number of new small business applications from 19 million under the current Biden administration to 25 million under a potential Harris-Walz administration. This ambition, however, has been met with skepticism from some analysts who question the feasibility of such a dramatic surge in entrepreneurship.
Additional components of Harris’ small business strategy include:
* Incentivizing state and local governments to streamline their business regulations, reducing administrative hurdles for entrepreneurs.
* Simplifying the process of obtaining occupational licenses, removing bureaucratic roadblocks for businesses seeking to operate legally.
* Launching a small business expansion fund to support lenders in low-income areas, providing them with resources to offer favorable loan terms to small businesses seeking to relocate or expand in historically underserved regions.
Despite the potential benefits, Harris’ proposal has drawn criticism from conservative economists who argue that the plan is contradictory and unsustainable. They point to the simultaneous goals of increasing tax deductions while also raising tax rates, arguing that such a strategy is inherently flawed.
E.J. Antoni, an economist at the Heritage Foundation, stated that the plan’s internal inconsistencies highlight a lack of coherent economic policy. He claims that the left-hand doesn’t seem to know what the right hand is doing, suggesting that the plan is simply incoherent.
While Harris’ campaign asserts that these proposals are at the core of her belief in the power of small businesses to strengthen the middle class, critics argue that these policies could have unintended consequences for the broader economy. They maintain that the plan’s focus on targeted federal intervention, while potentially helpful for some businesses, could ultimately prove to be inefficient and ultimately have limited impact on the broader economic landscape.
The debate surrounding Harris’ small business plan underscores the complex and often contentious nature of economic policy. While the plan aims to provide a lifeline to struggling small businesses, its effectiveness and broader economic impact remain a subject of ongoing debate, highlighting the political divide surrounding the best path forward for the nation’s economic future.
