Vice President Kamala Harris has introduced a proposal to expand the tax deduction for small business start-up expenses, a policy originally promoted by Republicans and supported by President Donald Trump. Harris’s plan seeks to increase the deduction from $5,000 to $50,000, a significant jump aimed at encouraging entrepreneurship.
The proposal closely resembles legislation introduced in 2018 by Rep. Vern Buchanan (R-FL), which sought to raise the deduction to $20,000. Known as part of the “Tax Reform 2.0” package, the bill passed the House with unanimous Republican support and the endorsement of the Trump administration but was opposed by most Democrats, who argued that such tax breaks primarily benefit wealthier business owners.
Under existing law, small businesses can deduct certain start-up costs, including advertising and salaries, before the business officially begins operations, but this deduction is limited to $5,000. Harris’s proposed expansion would make a significant difference for new entrepreneurs, potentially easing the financial burden of starting a business.
Harris is expected to unveil this proposal in New Hampshire as she campaigns for the creation of 25 million new small businesses during her first term. To date, the Biden administration has seen 19 million small businesses started.
Harris’s support for this tax break marks a departure from the Biden administration’s more progressive economic policies, which have been criticized by some as being unfriendly to business. Last month, Harris also backed a proposal to stop taxing tips for service workers, a policy initially suggested by Donald Trump. Additionally, Harris has revised her stance on fracking, now opposing a ban she previously supported.
