Politicians on both sides of the aisle laud small businesses as the “backbone” of our economy. They love photo-ops in front of main street coffee shops, small manufacturing facilities, and family-owned hardware stores. But, while they love to publicly pledge support of America’s small businesses, our politicians are sometimes more talk than action. Meaningful new policy to help small businesses grow and prosper rarely comes to fruition.
The current economy is arguably strong with declining inflation, low employment, rising equity markets, and declining interest rates. However, there are still big gaps in the economy that disproportionally effect small businesses. So what bold actions could President Trump or Vice President Harris take in their first year in office to provide meaningful assistance to small businesses? Here are five ideas:
1. Simplify taxes and make the 20% pass-through deduction permanent for small businesses
Ensure that America continues to lead the world in innovation, prosperity and economic development by creating or maintaining a tax code that incentivizes the behavior we want as a country. Big companies were able to get their 20% deduction made permanent back in 2017, but for small businesses- it expires in 2025. President Trump would likely reinstate them, which does help small businesses and Vice President Harris has proposed her own tax proposals, including expanding the tax credit for startups from $5,000 to $50,000 and a 28% capital gains tax rate for those making over $1 million.
During the pandemic Americans started small businesses in record numbers, exceeding any prior period in our country’s history. By making permanent the 20% pass thru deduction, immediate expensing of capital expenses, and full depreciation of R&D expenses, we create an environment that helps small business compete with large business and increase employment. Roughly half of our country is employed by small business, but close to two-thirds of all new jobs are created by small businesses.
In addition to cuts and credits, the tax filing process should be vastly simplified. The administrative and financial burden of filing taxes hurts small business owners in the short and long term. One of the impediments to applying for loans is the requirement to provide two years of tax returns, which many small businesses are behind on. Make the process quick and easy with standard deductions and lighten this load. Maintaining a competitive tax environment is the most effective way the federal government can help keep America as a leader of the free world.
2. Establish a balanced trade policy
Reducing tariffs and renewing the Generalized System of Preferences (GSP) will benefit US businesses, consumers, and developing nations. The tariffs imposed during President Trump's administration, and maintained under President Biden, are primary drivers of inflation, apply to many products the US does not competitively produce, and are another crippling tax on US businesses. In certain cases, increased tariffs will be critical to protect industries we still retain a competitive advantage in, like automobiles and semiconductors, and need protection from predatory price dumping.
Congressional renewal of GSP will give a select group of developing countries a 0% tariff rate on manufactured goods imported to the US. This 50-year-old, historically bi-partisan trade program lapsed on December 31, 2020, and was another devastating blow to US small business.
3. Immigration reform
Having a secure border is, of course, necessary and in need of immediate attention. However, security measures must be accompanied by changes in immigration law to allow people to legally enter the country and help us grow the economy. The reality is the overwhelming majority of migrants are hardworking people looking for a better life. We have a dramatic worker shortage in sectors like health care, engineering, IT, skilled trades, restaurants and dependent care. New visas can be created, current visa limits can be increased, the application process can be streamlined.
This isn’t rocket science. There are numerous technological answers for tracking immigrants to ensure they are paying taxes and law abiding. America needs the best and brightest from all over the world to compete in our global economy. There is nothing “America First” about letting people who can help us compete get away from us and help build our competitors economies.
4. Reform the Small Business Administration (SBA) loan process
While the SBA offers great loan products the application process is arduous. SBA needs a streamlined process that requires less information to get the money out the door. In addition to making the process for applying for a loan easier and simpler, the SBA needs a much higher risk tolerance for borrowers, which means an application with less requirements, technical assistance to help business owners gather information and a product for new businesses who don’t have a track record of revenue and tax filings. New businesses are often forced into high-interest rate products, credit cards, or even worse – merchant cash advances to get started, deterring many would be entrepreneurs.
5. End remote work for government employees
While large companies have benefited from remote work through lower overhead and the ability to hire nationally, many small businesses have suffered. The ability for workers in small markets to find and perform higher paying jobs in larger markers has led to a workforce shortage especially in retail, hospitality, and manufacturing.
The new president should order all federal workers back to the office around the country and call on state and local governments to do the same. The president could also reach out to corporate America to reconsider their remote work policies. Amazon, for example, has already ordered their corporate executives back to the office. This change would increase foot traffic on Main Street and help small businesses find quality workers.
Conclusion
Small businesses truly are the backbone and lifeblood of our economy. From the family-owned car dealership with lots of employees, to the single mom who makes candles in her basement, they are by far the most optimistic people you will ever meet. They employ their friends and neighbors, support their communities, volunteer, and find ways to make payroll every month. Whomever the new president is, they should embrace this American optimism and find ways to support the millions of American risk takers who get up every day and make it all happen.
Dick Cardew is a small business owner in Buckeye, Arizona, Adam Fazackerley is a small business owner in Alexandria, Virginia. Mike Zaffaroni is a small business owner in Jacksonville, Florida.