Candidates for office maintain a “platform” that they run on (essentially just the ideas that form the foundation of their campaign) that consists of proposals and plans covering varying topic areas. For a school board candidate, that might be raising money for more books, and state senators might promise to get more resources to a long-neglected town. Presidential candidates’ platforms run the gambit from international plans (trade, immigration, how to fight terrorism) to supporting social services (education, welfare, social security) to bolstering the domestic economy. And that is where this proposal falls: how are the Democratic and Republican candidates for president going to support entrepreneurs over the next four to eight years? Thanks to Ryan C. for the question.
What exactly are entrepreneurs and why should we care about them when selecting a president?
Entrepreneurs are the people that take an idea and run with it, creating or managing products and services that keep us running and interested. Somewhat-obvious entrepreneurs include Mark Zuckerberg and Steve Jobs for creating and scaling up Facebook and Apple, respectively. There are also less-noted, or not at all noted entrepreneurs. If you know of a locally-owned shop in your community that opened a second location, it’s possible that the owner or manager could be considered an entrepreneur. Similarly, if you’re familiar with a start-up, the creator is almost certainly an entrepreneur.
We want to support entrepreneurs because they are vital to our economy. Innovation is key to our progress forward as a society; technology allows us to learn and access so many things and make incredible progress in healthcare, etc. Many rapid developments over recent history have completely changed life as we had known it, and these developments wouldn’t be possible without the developments made by innovators and entrepreneurs. Further, according to the US Small Business Administration, small businesses provided 66% of net new jobs in the economy since 1990, which is a huge deal.
Entrepreneurship can be a very rewarding field, but is also incredibly risky. It is thought that 95% of start-ups fail. But before you can even get to failing there, you need to have a fair amount of business knowledge, connections for advisers and investors, and base capital for investing, all of which are barriers to entry in the field. These can contribute to the lack of women and people of color in business (heard of the old boys’ club? The Kaufman Index notes that the majority of start-up entrepreneurs are men, had at least some college education, and were white).
So why would anyone do it? For the rewards of course! The challenge for government is finding the right level of support to encourage innovation for societal progress and the good of the economy, but not overly supporting business to the point of causing devastation if products and services fail. This balance is exactly what Sec. Clinton and Mr. Trump are trying to strike in their proposals.
The Clinton Plan
As a lifelong participant in government, Clinton has seen her fair share of entrepreneurial ventures and support systems. Her plan is on her website as follows:
As president, Hillary will make it easier to start and grow a small business in America by:
- Unlocking access to capital. We need to give small businesses—including women- and minority-owned small businesses—access to the financing they need to build, grow, and hire. Hillary will work to boost small-business lending by easing burdens for community banks and credit unions. Her plan will also allow entrepreneurs to defer student-loan payments with no interest while they get their ventures off the ground.
- Cutting red tape to streamline the process of starting a small business. It shouldn’t take longer to start a small business in the United States than it does in Canada or Denmark. Hillary will offer state and local governments new federal incentives to cut red tape and streamline unnecessary licensing to make it less costly to start a small business.
- Providing tax relief and simplification for small businesses. America’s smallest businesses—those with one to five employees—spend 150 hours and $1,100 per employee making sure they comply with federal tax laws. That’s more than 20 times higher than the average for larger firms. Hillary will create a new standard deduction for small businesses—like the one available to individual filers. She will simplify the rules so small businesses can track and file their taxes as easily as filling out a checkbook or printing a bank statement. And her plan would quadruple the start-up tax deduction to significantly lower the cost of starting a business.
- Incentivize health care benefits for small businesses and their employees. Hillary will expand the health care tax credit for small employers with up to 50 employees through the Affordable Care Act. And she will simplify complex phase-out and eligibility rules so that it’s easier for many more small businesses to get the credit and cover their workers.
- Opening new markets. Every small business across America should be able to enter new markets—whether those markets are across town or across the world. We should invest in the roads, bridges, ports, and airports that make it easier for small businesses to reach new customers, and encourage innovations that unlock new markers for small businesses. Read more here.
- Making sure small businesses get paid—not stiffed. Hillary believes it is outrageous when big businesses like Donald Trump’s build their fortunes by repeatedly stiffing the small businesses that do work for them. She will stop large companies from using expensive litigation hurdles to deny small businesses payment for services, and she’ll give small businesses recourse to take on predatory behavior. Read more here.
- Supporting small-business owners and entrepreneurs. Hillary will work to provide incubators, mentoring, and training to 50,000 entrepreneurs and small-business owners in underserved communities across the country. Read more here.
- Make the federal government more responsive to small business. Hillary will push the federal agencies to make government more user-friendly, guaranteeing a 24-hour response time to small businesses with questions about federal regulations and access to capital programs.
The Trump Plan
As an entrepreneur himself, Trump knows first-hand what supports a business could use. However, he does not propose a plan by which we can compare point-by-point. I’ve found some passages on his website that do pertain to small businesses:
Under my plan, no American company will pay more than 15% of their business income in taxes. Small businesses will benefit the most from this plan. Hillary Clinton’s plan will require small business to pay as much as three times more in taxes than what I am proposing, and her onerous regulations will put them totally out of business. I am going to cut regulations massively…Our lower business tax will also end job-killing corporate inversions, and cause trillions in new dollars and wealth to come pouring into our country – and into cities like Detroit. To help unleash this new job creation, we will allow businesses to immediately expense new business investments. –In a speech to Detroit Economic Club
The Trump Plan will repeal the death tax, but capital gains held until death and valued over $10 million will be subject to tax to exempt small businesses and family farms. To prevent abuse, contributions of appreciated assets into a private charity established by the decedent or the decedent’s relatives will be disallowed. –Tax Plan Fact Sheet
What does this mean?
Clinton’s plan garnered a fair amount of press when she announced it back in June. There were some that noted that Clinton is the first candidate to put forth a plan addressing the power and labor norms of the tech industry as well. Critics argue that the plan would only benefit the elite, not the average worker. Others also note that this, perhaps obviously, would require more government spending as the investment.
As Trump has not announced a comparable plan but is a businessman, he also has been talked about in the press. Huffpost considered how his various positions like his stance on healthcare would help, and his position against raising the minimum wage may harm, investment and small businesses. Fortune compared Clinton and Trump on a number of issues relevant to entrepreneurs, including the ACA, taxes, and trade. A critic blasted Trump’s economic plan as being anti-entrepreneur in July.
That said, these are all theories on what will work and what is practical. It is up to you to decide what you value to decide your vote. A tool for helping to compare how these and other tax plans may turn out is The Fiscal Ship, where you choose priorities and fiscal proposals, and see what you can (theoretically) accomplish. Good luck saving the world!
How did I do? Did I miss something? Did you learn something new? Understand the finer points of business and want to clarify something? Let me know in the comments below.