Why Kamala Harris’ Tax Plan Is Missing the Mark with Small Businesses

Vice President Kamala Harris’ proposed tax plan, which includes a $50,000 tax credit for new startups, isn’t impressing the 30 million small-business owners in the U.S. A recent poll conducted by the Job Creators Network reveals that these owners prefer former President Donald Trump over Vice President Harris by a significant 12-point margin. This disparity isn’t surprising when you consider both common sense and past experiences. The issue with Harris’ plan is its lack of immediate benefit to existing small businesses. The $50,000 tax credit only applies to new startups, not the 30 million businesses already operating. This approach, while meant to encourage new ventures, ignores the reality that many small businesses need help now, not years later. Adding to the frustration, Harris’ plan to raise taxes on corporations and personal income affects a significant number of small businesses. Around 20 percent of these businesses are organized as C corporations, and many more operate as S corporations or LLCs, meaning any increase in personal income taxes directly impacts them. The Harris team seems to overlook that a tax hike on owners’ personal income is essentially a tax on their businesses. Harris’ plan also disregards the practicality of starting a business. It typically takes two to three years for a startup to become profitable, according to the Small Business Administration (SBA). Even when profits are made, most business owners reinvest this money back into growing their companies. This means the benefits of Harris’ tax credit might not materialize for four to five years, which is a long time for small businesses struggling to stay afloat.

The Harris team’s plan raises questions about their understanding of small-business realities. It takes experience in running a business to appreciate the challenges faced by entrepreneurs, especially in the crucial early years. These businesses often rely on personal savings or second jobs to keep going. Most small-business owners would agree that the Harris plan lacks a solid grasp of these fundamental realities. In contrast, many small-business owners found Trump’s tax cuts beneficial. These cuts fueled job growth, increased wages, and boosted the overall economy. The positive impact was felt across diverse groups, from urban and suburban areas to different age groups and racial backgrounds. The tax cuts didn’t discriminate but instead fostered growth equally among small-business owners. Small-business owners remember how Trump’s policies favorably affected their businesses. Under Trump, corporate taxes were lowered from 35 percent to 21 percent, allowing many owners to invest more in their companies. Personal income tax cuts also provided relief to millions. This comprehensive support echoed Trump’s understanding of small-business needs, given his background in a family construction business. Conversely, under the Biden-Harris administration, inflation and rising interest rates have taken a toll on small businesses. The economic struggles have been exacerbated by extended COVID lockdowns, which disproportionately burdened small businesses compared to large corporations. Many business owners lost their businesses entirely, while others continue to struggle with the consequences. Small-business owners see through Harris’ startup tax credit as a gimmick that doesn’t address their immediate needs. They value policies that provide real, tangible support for their existing businesses, not just promises for startups.

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