Vice President Kamala Harris has proposed new tax breaks for small businesses, but conservative economists say they could be offset by her plans to raise other taxes.
Conservative economists are casting doubt on Vice President Kamala Harris' proposal to reduce startup costs for new small businesses, arguing that it could be undermined by her plans to raise marginal tax rates.
Harris unveiled her small-business tax proposals last week, which included a substantial increase in the standard tax deduction for small-business startup costs, from $5,000 to $50,000. The vice president said the measure would "help more small businesses and innovators get off the ground."
VP Harris' Economic Plan for Small Businesses: Mixed Reactions from Economists
However, economists point out that Harris has simultaneously expressed support for raising marginal tax rates for both corporations and individuals, which they argue would diminish the benefit received by the tenfold increase in the startup deduction.
"She wants to increase taxes on all kinds of income, on all classifications of income, so no matter how the small business is ultimately structured, they will still be paying more," conservative economist E.J. Antoni told Fox News Digital. "Now, is that going to be diminished by this increase in the tax deduction? Absolutely. But, then, why are you doing both? That doesn't make any sense."
VP Harris' Economic Plan for Small Businesses: Mixed Reactions from Economists
Under the Trump administration, standard deductions were increased while marginal tax rates were lowered, Antoni noted. Additionally, under former President Trump's tax cut measures, small business owners were allowed to claim a deduction for their "qualified business income."
Trump, who spoke at the Economic Club of New York on Thursday, laid out plans like lowering the corporate tax rate from its current 21% to 15%. Trump's first-term tax cuts reduced it previously from 35%.
VP Harris' Economic Plan for Small Businesses: Mixed Reactions from Economists
"Harris wants to do the opposite [of Trump]," Antoni said. "She wants to increase the deduction, but then increase the marginal tax rates."
Robert Wolfe, a Harris supporter and former chairman of UBS Americas, a global wealth management firm, pointed out that the tax rate increase for individuals will only impact those making more than $400,000.
VP Harris' Economic Plan for Small Businesses: Mixed Reactions from Economists
"We want small businesses being built," Wolfe said. "And we know that the ramp-up phase takes time, so the idea that we wouldn't applaud small businesses and entrepreneurs getting tax credits doesn't make sense to me."
Richard Stern, director of the Grover M. Hermann Center for the Federal Budget at The Heritage Foundation, said that under current tax laws, new business owners can already deduct most early-stage expenses, like payroll and equipment costs. Startup expenses, meanwhile, are defined under the tax code as those costs incurred prior to a business being registered with the federal government, which, according to Stern, are typically pretty minimal.
"Harris' new tax deduction for small businesses isn't a subsidy for starting a business per se," he said. "It's only useful if you actually spend $50K on pre-business expenses. So, this is disproportionately a subsidy for larger starting businesses."
Stern also agreed with Antoni's take that Harris is essentially giving to small businesses with one hand, while taking from them with the other.
Antoni, meanwhile, suggested that whoever is formulating economic policy for the Harris campaign is "building the train as it goes down the tracks."
"It really seems like there were no policy proposals thought out ahead of time, and they are just throwing these things together," he said.
While right-wing economic experts argue Harris' latest tax proposal would be diminished by her plans to raise taxes in other areas and do little to help inexperienced business owners start their first company, supporters of Harris argue the move will be "critical to driving further economic growth."
Roger Hochschild, a Harris supporter and former CEO at Discover Financial Services, said Harris is "very clear in her support of small businesses and acknowledging that they are the backbone of the economy."
Rhett Buttle, a former 2020 Biden campaign adviser, said the increased tax deduction proves Harris' "deep commitment" to entrepreneurs.
In addition to her new tax proposals for small businesses, Harris also laid out her plan this week for taxing capital gains. She wants to increase it to 33%, whereas Biden reportedly wants the current rate, which is at 23.8%, to be nearly doubled.
Fox News Digital reached out to the Harris campaign for comment on the criticisms about her small-business tax proposal, but was only directed to a social media post of a small business owner speaking at a Harris campaign rally.
