Vice President Kamala Harris has unveiled a new proposal for small business tax breaks as part of her economic platform. The plan, announced during a campaign speech in New Hampshire, includes increasing the tax deduction for startup costs from $5,000 to $50,000. The goal is to attract 25 million new small business applications in a potential first term.
While the plan could stimulate economic activity, experts warn that it would add billions to the deficit over the next decade and would require congressional approval. In response, the Trump campaign criticized the proposal, stating that it would drive up national debt.
Harris described the plan as part of her efforts to build an “opportunity economy.” She highlighted that starting a new business in America costs around $40,000 on average and emphasized that the current tax deduction for startups is only $5,000.
Garrett Watson from the Tax Foundation estimated that Harris’s proposal could cost approximately $20 billion over 10 years. However, he noted that this plan is smaller compared to other proposals put forth by Vice President Harris and reflects her interest in promoting startup businesses.
The proposed policy allows new startups to spread their deductions over several years or defer claiming them until they become profitable. Currently, companies can deduct up to $5,000 of their qualifying startup costs but lose this deduction if expenses exceed a certain amount.
Marc Goldwein from the Committee for a Responsible Federal Budget (CRFB) expects minimal political opposition to this proposal due to its relatively low cost and structure. However, he acknowledged that Harris’s other plans may have significant long-term costs for the government.
Harris’s economic agenda also includes plans such as expanding access to venture capital for small businesses and increasing investment in community development financial institutions. She has previously suggested extending subsidies under the Affordable Care Act and ending federal income taxes on tips.
Political science professor Aaron Dusso noted that focusing on small businesses aligns with Republican priorities but cautioned about working on “the other team’s turf.” He emphasized that while it can be beneficial for politicians to address issues associated with their opponents’ party platforms, they should not make them central focuses of their campaigns.