New Business Owners May Qualify for $50,000 Tax Deduction in Harris Plan

Vice President Kamala Harris is launching a new economic initiative aimed at significantly increasing the number of small businesses in the United States. She plans to announce her target of 25 million new business applications during her first term if elected. This ambitious goal exceeds the over 18 million new applications that have been filed so far under the Biden-Harris administration, a period marked by a surge in business applications following the disruption of 2020.

To achieve this target, Harris seeks to reduce the burdens of red tape and lower the initial costs associated with starting a business. Her plan includes proposals designed to alleviate the challenges that aspiring entrepreneurs often face as they embark on their business ventures.

A key component of Harris’s initiative involves enhancing the tax deduction available to small businesses for their startup expenses. Many small owners currently find themselves resorting to innovative funding solutions in order to establish their enterprises, which can introduce additional risks. Harris aims to increase the current startup deduction from $5,000 to an impressive $50,000. Moreover, her proposal would allow businesses to defer claiming this deduction until they become profitable, aligning the tax benefits more closely with their financial situations.

In addition to tax incentives, Harris emphasizes the importance of reducing the administrative burdens placed on new business owners. It is well-known that a significant number of small businesses struggle to navigate through bureaucratic processes before they can officially open their doors.

Her strategy includes motivating local governments to streamline their regulations, implementing a standardized deduction to make tax filing simpler, and eliminating barriers associated with occupational licenses which can prevent businesses and workers from operating across state lines.

Harris is also committed to directing federal funds toward small businesses. She envisions ensuring that one-third of federal contracts will be allocated to smaller enterprises and proposes establishing a fund to assist community banks in offsetting interest costs for small business loans.

Furthermore, Harris has previously advocated for the restoration of the expanded child tax credit, increasing it to $3,600 and offering middle- and lower-income parents an additional $6,000 credit during their child’s first year. This initiative aims to provide better financial support to families, thereby further stimulating economic growth.

However, how effective a future President Harris could be in implementing these significant economic reforms will largely depend on the composition of Congress. The recent attempts by President Biden to revive the expanded child tax credit encountered substantial obstacles in the Senate. A similarly divided legislative body could present even greater challenges for a hypothetical future administration under Harris.

As Harris prepares to unveil her plan, the focus remains on fostering an environment where small businesses can thrive, innovate, and contribute to the overall economy. Her proposals reflect a commitment to not only facilitating business growth but also tackling the broader economic issues that come with establishing a new venture.

The success of her initiatives and their implementation would have wide-reaching implications for how small businesses operate and flourish in today’s economic landscape.

Source: Business Insider