Economists from the right criticize Harris' small-business tax plan

Vice President Kamala Harris' proposal to lower startup costs for small businesses is being criticized by conservative economists as part of her "Opportunity Economy" platform.

Last week, Harris presented new small-business tax proposals to decrease the financial burden of starting a new business. One of the proposals was a significant increase in the standard tax deduction for small-business startup costs, from $5,000 to $50,000. The vice president stated during a speech that this was essentially a tax cut for starting a small business, which would help more small businesses and innovators get off the ground.

Simultaneously, Harris has shown support for increasing corporate and individual marginal tax rates, which conservative economists claim would decrease the benefits of the tenfold increase in the startup deduction.

"E.J. Antoni, a conservative economist, stated on Planet Chronicle Digital that she wants to increase taxes on all types of income, regardless of classification, so that small businesses will still pay more, even if they are structured differently. However, she questioned the logic of doing both, as the increase in tax deductions will only diminish the impact of the tax increase."

During the Trump administration, standard deductions were raised and marginal tax rates were reduced, as Antoni noted. Furthermore, under President Trump's tax cuts, small business owners could deduct their "qualified business income." Ultimately, Congress will decide whether to retain any of Trump's expiring tax cuts.

On Thursday, at the Economic Club of New York, Trump announced plans to lower the corporate tax rate from 21% to 15%, which is a reduction from his first-term tax cuts that decreased it from 35%.

"Antoni stated that Harris intends to do the opposite of Trump by increasing deductions while also increasing marginal tax rates."

UBS Americas' former chairman and Harris supporter, Robert Wolfe, stated that the tax rate increase will only affect individuals earning over $400,000.

"Small businesses should be built, and we understand that the initial phase requires time. Therefore, it doesn't make sense to me not to support small businesses and entrepreneurs receiving tax credits."

According to Richard Stern, director of the Grover M. Hermann Center for the Federal Budget at The Heritage Foundation, new business owners can already deduct most early-stage expenses, such as payroll and equipment costs. However, startup expenses, as defined under the tax code, are those costs incurred before a business is registered with the federal government, which are typically minimal.

"Harris' new tax deduction for small businesses is not a subsidy for starting a business, but rather only useful if $50K is spent on pre-business expenses. As a result, it disproportionately benefits larger starting businesses."

Antoni's view that Harris is taking from small businesses while giving to them was agreed upon by Stern.

Antoni proposed that the person responsible for economic policy for the Harris campaign is "constructing the train while it moves forward."

He remarked that it appeared as though no policy proposals had been planned in advance, and they were merely hastily putting things together.

While some right-wing economic experts believe that Harris' latest tax proposal may be diminished by her plans to raise taxes in other areas and do little to help inexperienced business owners start their first company, Roger Hochschild, a Harris supporter and former CEO at Discover Financial Services, argues that the move will be "essential to fueling additional economic growth."

Hochschild stated that she believes small businesses are crucial to the economy and that she supports them clearly.

According to NBC News, Rhett Buttle, a former 2020 Biden campaign adviser, stated that the increased tax deduction demonstrates Kamala Harris' "strong dedication" to entrepreneurs.

"Small business and entrepreneurship tends to unite people from all walks of life, despite their starkly different political divisions," Buttle said.

Harris has proposed a new tax plan for small businesses, and also revealed her plan to increase the capital gains tax rate to 33%. Biden is reportedly considering nearly doubling the current rate of 23.8%, as per The Wall Street Journal.

The Harris campaign directed Planet Chronicle Digital to a social media post of a small business owner speaking at a rally in response to criticisms about her small-business tax proposal.

Gabe Gutierrez of NBC asked the entrepreneur, "Do you believe your small business is thriving more under the current administration than it did during the Trump era?"

"Without a doubt," replied Brad Smith, the business owner. "I believe the reason is entirely related to optimism - if you're a pessimistic candidate or president, you won't start a business."