The US Election will soon have someone clinch the position of President in November 2024.
While a lot of the discourse has revolved around Donald saying Haitian immigrants might be eating pets and Kamala repeating how to be unburdened by what has been, one has to wonder what either Presidential candidate would do for businesses in the US.
So, how business-friendly are The Donald and Kamala?
Take Kamala, for instance. She was said to have proposed a substantial increase in deductions for taxes in small businesses from $5000 to $50,000, calling it a tax cut for starting a small business. So, new SEs could use the tax deduction across years or get the deduction once there’s a profit. According to her, there’s a plan to make filing taxes for businesses easier and cheaper. But, maybe, many small businesses in their larval stages wouldn’t be generating significant taxable income.
She has, also, pledged that in her first term, about 33% of all federal contract dollars would go to small businesses. But, would small businesses always have the resources for large government contracts? There’s said to be an ambition to reduce the red tape for small business owners and make it easier for them to obtain occupational licenses for workers and businesses to operate across state lines.
And what about beyond the startup sphere? Kamala is said to be proposing to increase the corporate tax rate from 21% to 28%, which her team says is a fiscally-responsible way to put money back in the pockets of working people & ensure billionaires and big corporations pay their fair share. Maybe, large corporations would, somehow, find a way to offset this, but what about a mid-sized company? Would they have the flexibility to absorb this kind of increase? Would it mean they’d have to cut costs elsewhere?
Conversely, in his first term, Donald was said to have slashed the corporate tax rate from 35% to 21% and if he gets a second term, he has proposed going even further to make the tax rate 15%. Though, should the tax rate be a flat one across enterprises? Maybe, a 15% tax rate could disproportionately benefit a bigger corporation, but a smaller entity would not see a significant tax benefit. So, maybe the tax advantage might not trickle down.
On top of that, Kamala was said to have proposed a 28% tax on long-term capital gains for top earners, which just might make it harder for startups to attract investment from the more wealthier backers.
She, also, seems to be supporting anti-price gouging measures to combat inflation in consumer goods. For the consumers, that could be great, but that could suck for businesses in the US. This could be interesting, but what would constitute gouging and what would constitute price adjustments as a response to inflation and other factors?
And what about tariffs? Donald has called “tariffs” one of his favourite words. His policy is said to include tariffs as high as 60% on goods from China, while goods imported from other countries could go between 10% to 20%. In theory, that could better protect domestic industries against China, but if there’s a business relying on international supply chains, they’d have to pay more, probably leading to higher prices for consumers. This is because it wouldn’t be China paying the tariff, the company would have to pay the tariff before the product enters the market. Alternatively, it could mean that the importer would pick a cheaper alternative from another country and may even mean businesses would better engage with businesses in the US itself. So, it’s complicated.
The Biden-Harris administration was said to have expanded access to capital for smaller businesses, providing loan guarantees to lenders in order to minimize their risk exposure, incentivizing them to provide funding. Plus, Kamala was said to have announced a policy to provide 1 million forgivable loans for black entrepreneurs for amounts up to $20,000 to start new ventures.
It seems like Kamala’s policies for when she could be President might be more beneficial for businesses that need help with early-stage growth, trying to deal with entry costs and foster better financial pathways for new ventures. On the other hand, a Donald presidency might be looking to be more beneficial for established SMEs and corporations with lower tax obligations.
If Donald’s focusing purely on reducing taxes, maybe the startup angle isn’t benefitted as much and he may not be providing as much incentive for new players to enter the market. A lot of startups are about that “high risk, high reward” life. Lowering taxes might not mean that much for new entrepreneurs with speculative or untested ideas. And if high-growth startups don’t have that support, US innovation could fall behind.
But, while both Donald and Kamala have plans or in some cases, concepts of a plan, it’s all about execution. What happens when the rubber hits the road?
So, what do you think? Would a Trump presidency be more beneficial for businesses in the US in the next 4 years? Or would it be a Harris presidency?
