How do the 2024 elections impact small business owners?

As the 2024 presidential election nears, business owners should closely follow developments that could reshape policies affecting taxes, regulations, healthcare, and trade. The contrasting platforms of Vice President Kamala Harris and former President Donald Trump present clear choices with significant implications for small businesses. 

UPDATE: The 2024 elections have ended. Please check our newer analysis for a review of how Donald Trump's victory affects small business owners' corporate credit outlook.

Kamala Harris's Policies: Reform with a Focus on Support and Regulation

1. Expanded Startup Incentives 
Harris proposes raising the startup tax deduction from $5,000 to $50,000, a substantial change that could ease early-stage financial strains. This would allow new businesses to defer these deductions until they achieve profitability, optimizing cash flow when it's most needed.

2. Access to Federal Contracts and Simplified Licensing
Harris has pledged to allocate one-third of federal contract dollars to small businesses, particularly in rural and underserved areas. Simplifying occupational licensing would help reduce barriers to entry in regulated industries, promoting a more inclusive business environment.

3. Corporate Tax and Capital Gains Increases
On the flip side, Harris’s plan to raise the corporate tax rate to 28% and increase capital gains tax for high-income earners could cut into small business profits, particularly those organized as C-corporations or reliant on wealthy investors.

4. Focus on Fair Trade and Sustainability  
Her approach to trade emphasizes fairness and environmental protection, fostering a more stable trade landscape that could benefit industries aligned with sustainable practices.

Donald Trump's Policies: Deregulation and Tax Cuts

1. Lower Taxes and Deregulation  
Trump's platform centers on reducing tax burdens, including a potential reduction of the corporate tax rate to 15% and maintaining deductions from the 2017 Tax Cuts and Jobs Act. These measures could free up capital for reinvestment and growth.

2. Deregulatory Measures  
Trump’s approach to reducing regulatory constraints is designed to streamline operations for businesses, particularly startups that might otherwise face significant compliance hurdles.

3. Tariffs and Trade Protection  
A hallmark of Trump's policies is trade protectionism, with a focus on tariffs to protect domestic industries. While this might shield some U.S. producers from foreign competition, small businesses dependent on international supply chains could see cost increases, impacting profitability and product pricing.

4. Healthcare Adjustments  
Trump aims to replace or overhaul the Affordable Care Act, advocating for market-driven solutions such as Health Savings Accounts (HSAs). This may lower employer costs but could limit the robustness of employee coverage, potentially impacting workforce satisfaction.

Preparing for Post-Election Outcomes

Whether Harris’s focus on regulation and social programs or Trump’s deregulatory, tax-centric agenda wins the day, small business owners must remain agile. Proactive steps include reassessing tax strategies, diversifying supply chains, and considering the impacts of potential regulatory or trade shifts on operational costs.

Conclusion:  
The 2024 election will be pivotal for small businesses. By understanding each candidate’s policies, entrepreneurs can better plan for growth or safeguard against potential challenges. Staying informed and prepared will help business leaders navigate this politically dynamic period and position themselves for success.