Kamala Harris Proposes $50,000 Small Business Deduction

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As the United States gets closer to the 2024 Presidential Election, we’ve seen both Republican candidate Donald Trump and Democratic candidate Kamala Harris make bold campaign promises. Recently, Vice President Harris proposed major tax code changes for business owners. Let’s explore them, and their price tags.

To further her goal of “25 million new small business applications”, Vice President Harris unveiled a huge tax deduction that would greatly benefit small business owners. Currently, up to $5,000 of startup expenses are deductible in the year the business begins operations. Under Harris’s proposal, the deduction would increase to a massive $50,000, and it could be delayed until the small business realizes a profit.

This level of tax relief could be a game changer for business owners; however, a tax law change of this scale will be incredibly difficult to pass in both the House and the Senate. Unlike President Trump’s Tax Cuts and Jobs Act, Harris’s proposal also contains a significant tax hike for corporations. The corporate tax rate would be raised from the current 21% to 28%. Similarly, the long-term capital gains tax on corporations would increase from 20% to 28%. While that’s lower than current-President Biden’s proposed 39.6%, support for raising these rates may be difficult to garner across the aisle.

Unfortunately, while the $50,000 small business deduction would be incredible for startups, it would cost the government trillions of dollars, making it less likely to make the cut. And though the corporate tax rate and long-term capital gains tax increase could help pay for it, bipartisan cooperation to pass the measure would be nothing short of a miracle. Regardless, taxpayers would be left to pick up the tab.

In the coming months, it is vital for business owners to keep an eye on the nation’s political news. Big changes are on their way whether Trump or Harris win the election. Keep track of these changes with the XQ CPA blog. With daily updates, we’ll keep you informed on the latest tax and business news.

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Source:

https://www.cnn.com/2024/09/03/politics/harris-economic-proposals/index.html