Kamala’s small business deduction plan could cost $20 BILLION over next 10 years: report

According to the New York Post, Harris’ plan would raise the current $5,000 tax deduction for small businesses and their startup expenses to $50,000. A Harris campaign official said of the plan, "This proposal would also allow new businesses to wait to claim that deduction until they first turn a profit in order to reduce their taxes."

However, senior policy analyst at the nonpartisan Tax Foundation Garrett Watson told the outlet that the plan would cost Americans approximately $20 billion over the next decade. “Generally speaking, it’s better to allow startups the space to properly deduct costs from their revenue, including against future revenue, rather than disallowing deductions for expenses or requiring lengthy amortization of those costs.”

He based the assessment on a provision from the 2010 Small Business Job Creation Act, which raised the deduction of startup business expenditures from $5,000 to $10,000, which totaled $230 million over 10 years. However, the increased deduction ended after one year and wasn’t extended.

Senior policy director for the nonpartisan Committee for a Responsible Federal Budget Marc Goldwein concurred and told The Post, “Most of what this policy is doing is changing the timing of taxes. Normally it’s a benefit to deduct it faster, but startup costs are sometimes different.”

Goldwein added, “A lot of businesses are not going to be able to deduct that much in the first year.”

Adam Michel, the director of the libertarian Cato Institute’s tax policy studies, told the outlet, “Instead of limiting the deductibility of small business start-up expenses to just $50,000, a better policy would be to allow all businesses to deduct all of their expenses in the year they are made. This, often called full expensing, is one of the most pro-growth tax reforms, and was a centerpiece of former President Trump’s 2017 tax cuts.”

Michel continued, “Unfortunately, the Harris proposal excludes most business investments. By choosing to focus on a narrow segment of American employers, her proposals will make it harder for every other business in America to start up or expand their operations.”

“As a whole, the Harris tax plan will raise taxes on small and family businesses by letting top individual tax rates return to 39.6%,” Michel noted, “and will increase other business and investment taxes to some of the highest tax rates in the developed world. If Harris actually wanted to help American businesses grow, she should focus on allowing all businesses to deduct the costs of their investments and cut their tax rates rather than raising them.”

Harris is also pushing for a 28 percent corporate tax rate, an increase from the current 21 percent rate.

EJ Antoni, an economist at the Heritage Foundation told The Post, “The problem today is that most businesses can’t get started or fail shortly after starting due to high costs from inflation and regulatory burdens.”

He added, “Harris wants to impose an unrealized gains tax, higher income taxes, and higher taxes on investment. If she wanted to reduce taxes on small businesses, she wouldn’t be pushing for more taxes instead.”