With fewer than five weeks until Election Day, Vice President Kamala Harris is making a targeted pitch to entrepreneurs like Oswald, who are burdened by startup expenses. She even mentioned a key proposal in her opening answer at the presidential debate: expand the small business tax credit 10-fold, from $5,000 to $50,000.
In a pamphlet on her economic plan, dubbed the "Opportunity Economy," Harris explains that she would let business owners take advantage of the $50,000 tax deduction right away or a few years after launching, to help lower taxes once they start turning a profit. The proposal, like many of her others, would need congressional approval.
Tax experts told BI that enacting the credit would mean a change in timing more than anything else. Under current law, small businesses can deduct up to $5,000 in expenses immediately and must deduct any future expenses against their income over 15 years. Harris' proposal would let entrepreneurs deduct more money quickly.
Brett Theodos, a senior fellow at Urban Institute who specializes in small business loans, told BI that entrepreneurs would "love" to be able to deduct more of those expenses right away. Moving up the timeline would, he said, make many feel less strapped for cash from the very outset.
And there's another potential upside, according to Garret Watson, a senior policy analyst at the nonpartisan Tax Foundation. Small businesses would likely benefit from getting the deduction more quickly because of inflation, he said.
Though $50,000 sounds like a big-ticket promise, the experts BI spoke to said Harris' proposal actually wouldn't make a big dent in the federal budget. The Tax Foundation, where Watson works, examined cost estimates from prior expansions and found that the proposal would cost about $24.5 billion over 10 years.
Should she win the election, Congress would need to pass legislation to turn her expanded tax deduction idea into a reality. Despite the prevailing congressional gridlock, all of the experts BI spoke with said small businesses are a rare point of potential bipartisan agreement. Watson predicted that lawmakers would likely tie the proposal to their actions on the expiring 2017 tax provisions.
Posted by John3262005
2 Comments
Just $24.5 Billion over 10 years? Holy fuck I thought this was just stupid economic populist that is financially irresponsible but this is actually a cheap plan that will benefit the country A LOT. I hope we pass this. Increasing the small business tax deduction from $5G to $50G would go a long ways to helping small businesses (especially start ups) and apparently it’s cheap also.
It will 😭😭😭😭