Kamala Harris’s Plan to Create Jobs: Small Business

On Wednesday, Vice President Kamala Harris announced the Entrepreneur and Innovator Policy Plan, which will support small businesses, entrepreneurs, innovation and economic growth. As previously reported, the Vice President has a longstanding commitment to supporting small businesses and entrepreneurs throughout her career.

Her campaign announcement, made during a speech at Throwback Brewery, a woman-owned business in Northampton, New Hampshire that has been in business for over 10 years, gives us more insight into what her priorities will be for small businesses, entrepreneurs and innovators. The Biden-Harris Administration has prioritized Main Streets across the nation through legislation and executive orders. These efforts have led to a record 19 million new business applications since the Biden-Harris Administration took office, an unprecedented number. Small businesses have also created 70% of new jobs in the United States since 2019.

Vice President Harris’ plan will build on this success by setting a goal of 25 million new small business applications during her first term. Here are some policy proposals to get there:

Tax Credit

On average, it costs about $40,000 to start a small business, including market research, advertising, equipment, and salaries for employees while they’re training. But currently, the tax deduction for start-up expenses is only $5,000. Vice President Harris’ plan would expand this deduction to $50,000 to help new small businesses cover more of these expenses and give them more flexibility on when and how they can claim the deduction. For example, waiting until they’re profitable could make it more advantageous for a business to take the deduction at that point.

Additionally, she proposes a set of standard deductions on small business tax returns. An estimated one in three small business owners spends more than a week filing their taxes, and two in three spend at least $1,000 each year on them. Having standard deductions in the tax code similar to those available to individual filers would save small businesses time and money.

Expanding contract opportunities

Vice President Harris also committed to directing one-third of federal contracting dollars to small businesses during her first term in office by expanding contracting opportunities for rural and underserved small businesses. This would be a significant increase, as the Small Business Administration’s current goal is to direct 23% of major government contracting dollars to qualifying small businesses. This would represent more than $20 billion in increased revenue for small businesses.

Small and Medium Enterprise Expansion Fund

One of the challenges facing underserved main streets and communities is the difficulty of raising capital. This issue is further complicated by the fact that small businesses need time to generate the revenue needed to make initial loan repayments. Vice President Harris’ plan aims to address this issue by establishing a Small Business Expansion Fund that would cover interest costs for community banks and Community Development Financial Institutions (CDFIs) while small businesses expand. The fund will ensure that small businesses that want to locate, innovate, and create jobs in communities across the United States have access to affordable capital. The fund also builds on the State Small Business Credit Initiative (SSBCI) 2.0, part of the American Rescue Plan, and will provide funding to states, territories, and eligible municipalities to expand existing state small business investment programs or create new ones.

Less burdensome regulations

The Vice President also proposed measures to reduce red tape for small business owners through initiatives such as making it easier for workers and companies to obtain occupational licenses to operate across state lines. Additionally, her plan aims to provide incentives to state and local governments to reduce burdensome small business regulations, such as streamlining business licenses, zoning procedures, building permits, public right-of-way permits and health permits.

Given that some of the policy proposals she outlined are already supported by Democrats and Republicans, it’s refreshing to see her already laying out a plan for job creation across the country, and it’s significant to see a presidential candidate laying out an intentional strategy to support small businesses, which play a critical role in growing our economy.