Kamala Harris is trying to fashion herself as a champion of startups and small business but her record and policy proposals tell a different story.
Her tax increases and regulatory policies will ruin the chance for Americans to start a new business as only large, existing companies will have the resources to comply.
Harris cast the tie-breaking vote to bury small businesses in IRS 1099-K paperwork. The last thing a startup wants to deal with is excessive and unnecessary IRS paperwork as they are trying to get off the ground.
But as Vice President, Harris cast the deciding vote for the American Rescue Plan Act which imposed burdensome and invasive 1099-K paperwork requirements on independent contractors, small businesses, and freelancers. A 1099-K Form is an IRS document used to report payments received by a business or individual for the purchase of goods and services that were paid via a third party such as Venmo or PayPal.
Prior to enactment, a taxpayer only had to submit a 1099-K information reporting form to the IRS if both of two thresholds were met in a given tax year: a dollar amount of $20,000 in transactions AND a quantity of 200 transactions. The Harris vote scrapped these reasonable thresholds and replaced it with an onerous single threshold: a dollar amount of $600, with no transaction threshold. These means tens of millions of new paperwork obligations for Americans as well as the payment of “tax” that is not actually owed.
Under Harris’s 1099-K reporting rules, small businesses will encounter a more burdensome and intrusive tax season.
The Harris 1099-K policy is so onerous that the IRS illegally delayed its imposition TWICE.
The fact is, the Harris 1099-K policy is still the law of the land, all due to the Harris tie-breaking vote. It is the opposite of a startup-friendly policy.
Kamala’s “PRO Act” would snuff out startups before they even got off the ground, as the PRO Act would destroy the ability of independent contractors and freelancers to be their own boss. Many small business startups are self-employed contractors and freelancers who wish to be their own boss. But Kamala Harris wants them to HAVE A BOSS.
Independent contractors and freelancers are themselves small businesses are they are also vital to the success of brick-and-mortar main street small businesses.
Harris will impose the PRO Act legislation which will impose California’s radical “ABC” test which has destroyed the livelihood of California independent contractors who want to be their own boss. Click here to read hundreds of personal stories of independent contractors and freelancers whose lives were upended by this approach in California. Click here to see footage of self-employed truck drivers whose American dream was wrecked by this policy.
As Mike Rowe has written of the PRO Act:
“If it passes, no less than 70,000,000 independent contractors across the country will lose their independent status. Tens of thousands of truck drivers, graphic artists, dance instructors, cameramen, speech therapists, real estate agents, skilled tradespeople, and countless other Americans who would prefer not to labor as a traditional employee, will be forced to do so…or find a new line of work. Likewise, thousands of small businesses who are simply unable to hire full time employees will be forced to close.“
View Rowe’s video statement here.
Harris wants to impose a small business income tax hike to 39.6%. The Harris tax plan calls for an increase in the top marginal income tax rate from 37% to 39.6%. This will hit Main Street hard: small business sole proprietorships, LLCs, partnerships and S-corporations will all be hit. A successful small business startup can easily find itself hitting the Kamala Harris 39.6% tax bracket.
The Biden-Harris IRS is not protecting small businesses from increased audits from a supersized IRS. The official IRS watchdog — the Treasury Inspector General for Tax Administration — published a new report just last week noting the recently-supersized Biden-Harris IRS is NOT in a position to protect small business owners (specifically those making less than $400,000) from increased audits. IRS audits are especially burdensome to small businesses and can take two to three years to resolve, even if no change in tax liability occurs. The Inspector General report shows the Biden-Harris no-new-audits vow is not credible. Harris cast the deciding vote to supersize the IRS, and this legislation contained no new taxpayer protections. Startup small businesses especially cannot afford time-consuming fishing expedition audits from the IRS.
Harris wants a Death Tax hike. Kamala Harris wants to hike the Death Tax by repealing the Tax Cuts and Jobs Act. She is also on record in support of a 55% Death Tax with only a $3.5 million threshold which would hit many small businesses.
As Whoopi Goldberg correctly noted in her argument against the Death Tax, “Once you’ve paid your taxes, it should be a done deal. You shouldn’t have to pay twice.”
But Harris has worked in government most of her life and has no problem seizing someone’s life work. Americans with a startup dream of long term success and do not want large quantities of their life work double-taxed.
Harris wants to impose a second Death Tax by taking away stepped-up basis when parents die. Kamala Harris wants to impose a second Death Tax — separate from and in addition to her first Death Tax increase — by taking away stepped up basis. This tax would automatically “deem” inherited assets as “sold” for the purpose of generating a forced capital gains realization at death. This tax increase would also bury small businesses in expensive and burdensome IRS paperwork. 78% of small business owners say this tax will be crippling.
Harris wants to raise the capital gains tax to the highest level since its creation in 1922. She has endorsed a top federal capital gains tax rate of 44.6%. This will stifle American startups and entrepreneurial risk-taking.
Here is a direct quote from the Harris-endorsed 2025 budget: “Together, the proposals would increase the top marginal rate on long-term capital gains and qualified dividends to 44.6 percent.“
China’s capital gains tax rate is 20%. Is it wise to have a capital gains tax rate twice as high as China?
Under the Harris plan, the combined federal-state capital gains tax rate will exceed 50% in many states. California will face a combined federal-state rate of 57.8%, New Jersey 55.3%, Oregon at 54.5%, Minnesota at 54.4%, and New York state at 53.4%
Imagine a small business owner working for decades to build a small business, only to have the government take half of it when the sell the business and try to retire. Keep in mind capital gains taxes are not indexed to inflation, which means much of the “gain” is simply due to inflation.
Harris has called for the elimination of the deduction for pass-through business income (Section 199A). Kamala Harris has repeatedly vowed to repeal the Tax Cuts and Jobs Act “on Day One.” Harris’s vow means she’s calling to repeal the 20% deduction for small businesses organized as pass-through entities (LLCs, sole proprietors, S-corporations, partnerships) created by the Tax Cuts and Jobs Act. The ‘pass-through deduction” or “Section 199A” allows these filers to deduct up to 20% of their business income from federal income taxes. This provision provided desperately needed tax relief to American small businesses and allows them to compete with large multinational corporations. The “pass-through deduction” provided tax relief to 22,735,830 American taxpayers that claimed the small business deduction in 2020 including 18,237,470 taxpayers earning less than $200,000.
Harris has endorsed a Net Investment Income Tax hike. The Biden-Harris administration’s fiscal year 2025 budget officially endorsed by the Harris campaign calls for raising the the Net Investment Income Tax (NIIT) created under Obamacare from the current rate of 3.8 percent to 5 percent for filers making over $400,000 per year, roughly a 32 percent tax hike. Currently, the tax is imposed on individuals’ passive business income, including interest, dividends, annuities, and royalties. It is not imposed on wage income or nonpassive business income. Harris would broaden the NIIT to apply to non-passive business income while also increasing the hospital insurance (HI) payroll tax from 0.9 percent to 2.1 percent for individuals earning over $400,000.
This is a significant tax policy change that would increase taxes on small businesses across the country. When Congressional Democrats created this tax in 2010, they deliberately had it apply to passive income, not active business income because of the concern that it would raise taxes on small businesses.
Harris cast the tie-breaking vote on IRA’s tax hike on small businesses declaring losses. Startups often experience losses. As Vice President, Kamala Harris was the tie-breaking vote on the misnamed Inflation Reduction Act which included a tax hike on pass-through businesses with declared losses. The bill implemented a two-year extension on loss limitations of noncorporate taxpayers if the amount of the loss is in excess of $250,000 ($500,000 in the case of a joint return). This provision was previously scheduled to sunset in 2026. Worse, this specific provision was added to the IRA by Senate Democrats via amendment before final passage, meaning Harris had the opportunity to prevent this tax hike on small businesses from being included in the IRA but instead voted to include it. The Joint Committee on Taxation estimated the provision will increase taxes by $52 billion.
Stay tuned to ATR’s Kamalanomics.org for updates.