Potential changes under a Kamala Harris administration could significantly impact small-business owners, beginning with potential rises in tax rates. Currently, these owners contribute up to 30 percent of their profits to local, state, and federal taxes.
Additionally, small businesses may see an increase in regulations under Harris’s administration. Such regulations could shape business operations dramatically. Thus, it’s crucial for business owners to keep updated with potential policy changes to prepare and plan accordingly.
Proposed reinstatement of Obama-era policies by Harris could also see an upturn in health care costs. Such a change would require small businesses to adjust their financial strategy to accommodate these potentially higher expenses.
Moreover, Harris’s support for climate change mitigation measures means potential stricter environmental regulations for businesses. Furthermore, education policies may favor student-loan forgiveness and increased public school funding, carrying implications for small businesses in the education sector and those that cater to students.
The Harris administration may also advocate for higher minimum wages. This anticipated shift could lead to increased labor costs for small businesses, possibly requiring adjustments in their budgeting and business models.
Politics at the federal level can significantly impact the functioning and success of small businesses. Thus, it’s crucial for business owners to stay informed and adapt to changing times.
Harris along with President Biden’s tax strategy may involve letting key elements of ex-President Trump’s tax laws, like the Qualified Business Income (QBI) deduction, expire.
Harris administration’s potential impact on small businesses
Such changes could mean higher taxes for small businesses. Without the QBI deduction, currently allowing businesses to deduct up to 20% of their business income, they could see an increase in their annual tax liabilities.
Despite potential negative impacts on small businesses, the Biden-Harris administration argues these expiring tax laws would fund significant public spending initiatives in infrastructure, education, and healthcare sectors. Critics, however, suggest this strategy could harm the economy by putting financial strain on small businesses.
Many small businesses currently benefit from a deduction of up to 20 percent on their revenue, a feature that’s likely to vanish under Harris’s tax plans. Without these deductions, smaller entities may find it challenging to compete with larger corporations that can absorb additional tax costs
If this deduction is repealed, it could have drastic effects on small businesses, including decreased profits, hindered growth, and potentially leading to layoffs or closures. It’s vital for policymakers to consider these potential consequences when considering amendments to the tax code.
Lastly, the proposed changes also suggest an increase in taxes for corporate business owners filing “C-corporation” tax returns. The changes can affect the after-tax profits of these businesses, significantly impacting their investment decisions and potential earnings.
Furthermore, the first-year tax benefits related to capital equipment investments are likely to be phased out after 2025 under Harris’s tax plans. This means businesses won’t write off their capital equipment investments immediately after purchase; instead, the deduction would be amortized across the equipment’s utility years.
However, these tax plans might impact medium to smaller-scale businesses already struggling in the competitive market negatively. Increased taxes for successful businesses might raise the cost of goods and services indirectly, further impacting those who can least afford it.
