Kamala Harris Would Be A Disaster for Small Businesses

During the presidential debate on Tuesday night, Vice President Kamala Harris repeatedly claimed she would “help small businesses.” But economic data, the details of Harris’s “plan,” and the actual results of Biden-Harris policies over the past four years indicate a Harris presidency would produce more of the same dismal outcomes for small business owners and employees.

Currently, just under half of all Americans are employed by small businesses, defined as those with fewer than 500 employees. Approximately 27 percent of Americans work for companies with less than 50 employees.

According to the most recent survey by the National Federation of Independent Business (NFIB), small business optimism declined by 2.5 points in August, the sharpest fall since June 2022. The metric overall has been down throughout the Biden-Harris administration, reaching an 11-year low in March of this year.

“Owners remain pessimistic about future business conditions,” stated NFIB Chief Economist Bill Dunkelberg. Most owners have “poor expectations about business conditions six months from now,” while only six percent believe it is time to invest. “Capital spending is historically low,” he added.

In the most recent survey, small business owners named the cost of healthcare insurance as the most pressing issue. From 2020 to 2023, employer-sponsored health insurance premiums have increased by about 22 percent, placing an enormous burden on both small businesses and their workers. Americans who work at businesses with less than 200 employees contribute more for family coverage than those at larger firms, paying on average 38 percent of the premium compared to 25 percent at large firms.

Along with overall inflation, the so-called “American Rescue Plan” also directly caused these premium hikes by expanding Obamacare subsidies and passing those costs on to small business owners.

Most business owners in the NFIB survey said other problems, such as “uncertainty over economic conditions” and “uncertainty over government actions,” specifically when it comes to regulations and energy prices, are also bringing down optimism.

According to a report out this May from the House Committee on Small Business, regulations imposed by the Biden-Harris administration have cost small businesses a total of $1.7 trillion, including 312 million hours devoted to paperwork compliance. In a letter to Congress signed by 50 trade groups, small business leaders pointed out at least 28 instances where federal agencies “failed to adequately examine the economic costs of regulations.” The letter further called the number of regulations “unprecedented,” saying that they imposed a “disproportionate” burden on small businesses.

Rising energy costs resulting from the Biden-Harris administration’s war on American oil and gas production are also hitting small businesses hard. American commercial and industrial companies faced a $41.4 billion increase in energy costs in 2022 alone. As businesses face higher costs to keep the lights on and transport their goods, they are forced to make cuts elsewhere, including to their workforces, to stay afloat.

“Energy is one of the most important cost factors for businesses, alongside real estate prices for renting or purchasing, and labor costs,” said Joachim von Dieffenbach, a retired professor of Economics who advised three governments and lectured at universities in Austria, Germany, and Switzerland. “All these factors became unpredictable due to an energy policy prioritizing clean energy while limiting or disregarding more cost-effective options.”

The declining value of the U.S. Dollar poses another looming threat to small businesses, particularly those that rely on imported goods or materials, engage in international trade, or have energy-intensive operations. A weaker dollar makes imports more expensive, as businesses must pay more for goods and raw materials sourced from other countries. Small businesses often lack the negotiating power of larger firms to absorb or pass on these costs to customers, squeezing already thin profit margins. Since energy is often priced in U.S. dollars on global markets, a weaker dollar can also further drive up energy costs.

Harris’s policy proposals – to the extent that she has released any concrete plans at all – provide little reason to believe things would get better if she were in the Oval Office.

Harris has, for instance, said she would eliminate former President Donald Trump’s tax cuts, which she voted against in the Senate. Under the 2017 Tax Cuts and Jobs Act, business owners can deduct up to 20 percent of qualified expenses – amounting to significant tax savings for small businesses. Harris has pledged to let new business owners deduct $50,000 in expenses, up from the current $5,000 amount, but that will do nothing for existing small business owners who could be on the hook to pay tens of thousands of dollars more to the IRS.

Harris’s plan to institute higher income taxes, higher business taxes, higher investment taxes, and establish a tax on unrealized capital gains would all also be disastrous for businesses large and small.

Perhaps worst of all, Harris’s spending plans – which economists believe would cost at least $1.7 trillion – would likely see a return of the 40-year-high inflation that plagued the country throughout most of the Biden-Harris administration. For businesses still struggling to adjust to the 20 percent cumulative inflation over the past four years, another round of drastic price increases would be devastating.

Since Biden and Harris took office, small businesses have been in an era of pronounced decline. Giving Harris a promotion would likely result in more of the same, if not worse results.

Ben Solis is the pen name of an international affairs journalist, historian, and researcher.