Clinton Unveils Small Business PlanAugust 25, 2016
On Aug. 23, Secretary Hillary Clinton unveiled a small-business proposal aimed at job creation and strengthening small-business growth. While the proposal hits on some key issues, namely tax complexity which is a major problem for small businesses, it lacked the specificity that would help small businesses determine how helpful the proposals truly would be.
A key piece of Clinton’s plan is to expand Sec. 179 expensing to $1 million – a positive step for small businesses. She also would create a standard deduction for small businesses which would essentially work like the individual standard deduction, unfortunately, no income limit or maximum deduction level was specified. If structured the right way, a standard deduction for small firms could greatly ease complexity. Clinton’s proposal also calls for increase the start-up tax deduction and allow smaller businesses to utilize “checkbook” accounting, although exactly how that would work hasn’t been clarified.
Clinton also states her plan to simplify and expand the health care tax credit. And while any effort to make it easier to calculate and utilize the tax is good (currently, determining eligibility is extremely complex), a key driver in the low take-up rate of this tax credit is due to it being only temporary. With no slowing of the growth in health care costs in the past years, a temporary—while remaining affordable for the federal government—tax credit may not be a strong enough incentive to spur significantly greater offer rates among the smallest businesses.
Clinton’s plan also called for improving responsiveness to small business by federal agencies and reducing regulation by creating incentives for states to streamline licensing requirements and create reciprocity between states. Easing the regulatory burden would certainly be welcome among small businesses, however what, exactly, the federal role would be isn’t clear.
Another key tenet of Clinton’s plan is ensuring that small businesses get paid. While this is a very fair and appropriate proposal, it’s important that any new regulatory scheme doesn’t have any unintended consequences that could harm small businesses.
Finally, the proposal takes aim at access to capital, which has been an ongoing challenge facing small businesses, particularly those just starting up. Clinton’s plan would bolster the U.S. Small Business Administration and various state lending programs as well as free up credit unions and community banks to lend more to small businesses.
Please click here to read more on the proposal.