Entrepreneurs are cheering Vice President Kamala Harris’ plan to boost small businesses, but advocates say it foreshadows a bigger fight over the tax code.
On Wednesday, Harris unveiled policy proposals that aim to catalyze small business growth and create more slack in their balance sheets by way of several mechanisms. Those include expanding the tax deduction for startup expenses from $5,000 to $50,000, clearing barriers for owners and their employees to obtain or transfer occupational 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 Biloxi, Mississippi-based eatery.
Yet others in the small business community are looking to next year with concern, measuring how the assumed gains from Harris’ proposal would compare to those lost should the deductions under the tax law signed by former President Donald Trump expire at the end of next year. Whether Harris or Trump wins, they will likely face a tough battle to pass tax code changes through a potentially divided Congress.
Meanwhile, during a speech on Thursday meant to sharpen his economic policy, Trump again promised to slash tax rates for businesses and corporations.
Richard Trent, executive director of Main Street Alliance, said Harris’ proposal addresses many economic concerns of the organization’s 30,000 nationwide membership, but he’s also looking ahead to 2025.
“It’s just scratching the surface of what we need to do to ensure that local economies and small business owners are protected in an environment where corporate consolidation has made the largest businesses in our country more powerful than ever before,” he said. For example, he wants to see an expansion of cash grants from the Small Business Administration so that entrepreneurs with shallower pockets more competitive.
Eager for a boost
For his part, Kyse, who said he plans to vote for Harris, said the extra money from the startup deduction could help support payroll, better food distributor contracts, and warehouse space, a $70-per-month expense he’s so far avoided.
“My pops’ shed is completely filled with restaurant equipment,” he added.
His business has faced some tough choices of late. Despite placing second in a major local newspaper for best burger on the coast, Kyse, 43, said grocery inflation and price-cautious patrons have forced him to whittle down both his restaurant and its menu items, which include pastas and seafood nachos. Since 2020, he’s closed three other locations across Mississippi’s gulf coast stretch.
Revenue for 2024 stands at about $257,000, he said, down from $360,000 this time last year.
“I’m in the process of restructuring my menu to let them see the cheaper stuff on the value side,” said Kyse, who said it 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 Five Guys’ menu pricing, “and nobody said nothing.”
With two months until her Election Day showdown with Trump, Harris is racing to produce more details for her economic agenda. Her small business proposals come follow plans to build millions of new homes and a pledge to crack down on grocery price gouging.
Rhett Buttle, a lobbyist and organizer — and former economic adviser to both President Joe Biden and Harris — said the proposal shows Harris’ “deep commitment” to entrepreneurs. He also said it was a clear overture to red states as well, noting her promise to expand the State Small Business Credit Initiative, which was built out with funding from Biden’s American Rescue Plan and which “Republican governors love,” he added.
“There are broad strokes here to people from all walks of life,” he said. “Small business and entrepreneurship tends to be a great unifier in a world where people have starkly different political divisions.”
Deficits and deductions
If Harris wins, it will be important for the many in the business community to see how her agenda jibes with parts of the tax code owners and entrepreneurs already favor, including provisions made law under Trump.
Brad Close, president of the National Federation of Independent Businesses, noted the popularity among business owners of Trump’s 2017 law that allows them to deduct 20% of their qualified business income when calculating their taxes. “If the deduction is allowed to expire at the end of next year, millions of small businesses will face a massive tax hike,” he said.
The so-called pass-through 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 across a decade, according to the Joint Committee on Taxation. Extending the policy beyond 2025 would cost the government $684.2 billion through 2034, the Congressional Budget Office found. Last month, the nonpartisan Penn Wharton Budget Model said Trump’s overall proposals would increase deficits five times more than Harris’ would.
Harris’ small business plan is the latest example of the fine economic line she’s had to walk since her ascendancy to top of the ticket — appeal to a broad swath of moderate voters using populist policies aimed at taxing the richest Americans to spur wealth-generation among the poorest.
Charlotte Chaze, 33, doesn’t need much convincing. She already plans to vote for Harris, and the recent proposal includes a number 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 deduction would help Chaze expand her staff beyond her current four. And she cheers Harris’ plan to levy a 28% tax on long-term capital gains — lower than Biden’s 39.6% proposal but still more than the current 20%.
“As a small business owner who is super successful but doesn’t make enough for the capital gains policy to affect me or my business, that policy will help transfer wealth away from people who have more than they could ever spend, meaning more people will be able to afford my product,” said Chaze, who added that she has resisted raising prices alongside competitors. “It’s just good karma to believe in people over profits.”
This article was originally published on NBCNews.com