Kamala Harris’s small business plan: A tenfold expansion of a key tax credit

Kamala Harris will announce a new policy proposal Wednesday for a $50,000 tax credit for small businesses looking to get off the ground.

At the center of her new plan is the small business tax deduction currently in the tax code that allows would-be entrepreneurs to deduct up to $5,000 for things like business start-up costs.

The proposal from Harris would increase that tenfold — and will be formally announced on Wednesday with the vice president set to further outline her economic ideas during a stop in Portsmouth, N.H.

She will also unveil an overall goal of triggering 25 million new small business applications over the next four years.

Harris is also set to propose additional measures Wednesday around things like reducing red tape for small businesses. Tomorrow’s rollout also comes ahead of next week’s highly anticipated debate with former President Donald Trump where economic worries are likely to be top of mind.

“One of my singular priorities is to invest and grow our small businesses,” Harris said at a campaign stop last week.

The latest rollout from the Harris campaign is a clear effort to appeal to business-minded voters. She is attempting to ally herself with smaller businesses while sometimes assailing bigger ones.

“We will continue to build what I call an opportunity economy so that every American has an opportunity to buy a home or start a business or build intergenerational wealth and have a future that matches their dreams and ambitions and aspirations,” Harris added Monday during a Labor Day stop in Pittsburgh.

A potential for widespread appeal

For his part, Donald Trump often points to his own business record as president as a reason for voters to choose him. He also charges that a potential Harris administration would be cataclysmic for small businesses and has even taken to calling her “Comrade Kamala” in recent weeks.

But the Harris/Walz campaign has sought to combat the charges with what is now a second economic policy plan that follows last month’s release of a cost of living plan aimed at housing and grocery store prices as well as an expansion of the child tax credit.

But this week’s focus on small businesses and entrepreneurs could have appeal for millions of potential voters.

Small business entrepreneurship has been on the rise in recent years, according to the Global Entrepreneurship Monitor. It found that in 2022 almost 20% of US adults were in the process of founding a business or had done so in the past 3.5 years. It was the highest reading since the survey began back in 1999.

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The Biden White House has often touted increasing small business activity since the pandemic ended, pointing to some 19 million new small business applications during his term so far.

Harris is aiming to take it further, but other measures of entrepreneurship are coming in more mixed. The NFIB Small Business Optimism Index recently rose in July to 93.7 but remains below the 50-year average of 98.

This week’s Harris/Walz proposal, meanwhile, is also set to include new rules they say will make it easier to start a business. The ideas to be unveiled include ways to claim this new deduction to maximize the tax impact. Also in the works are plans for reducing some of the paperwork needed for things like small business licenses.

A focus on small over big businesses

This week’s Harris plan could also be a selling point among crucial donors, especially parts of Silicon Valley focused on “little tech” startups as opposed to giant companies like Meta (META) and Alphabet (GOOG), which have gradually lost public support in recent years amid increasing scrutiny from antitrust regulators in Washington.

Likewise, Harris has sought in recent weeks to position herself as a friend of small businesses and a foe, of sorts, to those bigger corporations.

Last month’s prices plan focused on Democratic charges that grocery store owners and corporate landlords are “price gouging” their customers. Harris has detailed plans to crack down on their practices.

Also this week, the Harris campaign released a new campaign ad focused on economic issues and drawing a contrast between the Harris and Trump economic plans. A keen focus for Harris is Trump’s friendly relationship with corporations and his focus, as the ad’s narrator said, “on giving them tax cuts.”

Trump has often discussed lowering the federal corporate tax rate from its current level of 21% to 15%-20%. Harris is behind a plan to raise that rate to 28%.

Meanwhile, there is at least one large corporation that Harris is trying to be friendly with: McDonald’s (MCD). Harris often notes that she worked at the chain during a summer in college. Both she and Trump are looking to be associated with the brand, which the company says is patronized by nearly 9 in 10 Americans at least once a year.

Also potentially in the offing in the weeks ahead is a Kamala Harris plan for the “care economy” around issues like childcare and paid family leave. These have long been priorities for the vice president, with her campaign signaling that plans there could also be in the offing soon.

Ben Werschkul is Washington correspondent for Yahoo Finance.

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