With a recession looming and job opportunities becoming scarce, many people are looking to entrepreneurship as a new career path.
How will the upcoming American election impact small business owners? Here’s my take on how small business friendly Obama and McCain are:
Obama
- Increase the minimum wage and index the rate to inflation so that it goes up every year
- Wants to eliminate all capital gains taxes for new business start-ups
- Give a $500 credit to business owners to offset the self-employment tax
- Proposes making the R&D tax credit system permanent
- Give a 50% refundable credit for employee health insurance premiums that are paid by the employer
- Suggests that entrepreneurship in rural America is critical – his solution? Create a small-business and microenterprise initiative where investors can get a 20 percent tax credit for $50,000 investments in small businesses
- Require all employers to automatically enroll workers in 401(k)s or IRAs
- Keep the estate tax rate at 45% and increase the exemption limit to $3.5 million
McCain
- Lower the corporate tax rate from 35% to 25%
- Wants to reduce the chances of taxes going up by requiring a three-fifths majority vote in Congress necessary to raise taxes
- Allow small business owners to expense new equipment and technology purchases in their first year
- Proposes creating a permanent ban on Internet taxes (states like New York and Texas are trying to push forward an Internet sales tax initiative)
- Make the R&D tax credit system permanent, but change the formula
- Wants to ban cellphone taxes (federal tax code states business people can only write off the portion of their cell phone bill that applies to business and not personal use)
- Create a tax credit system to allow people to buy personal health insurance that they can take with them from job to job
- Reduce the estate tax rate to 15% and increase the exemption limit to $5-10 million
Historically it has been entrepreneurs and small business owners who have created new jobs and been the driving force behind the economy. If America’s economy is going to rebound it will come from its entrepreneurs investing in new ideas, innovation, and research and development.
Which candidate do you feel is the most small business friendly?
Obama’s collective socialism is not the change we need. We should put our hope in capitalism, not socialism which continues to fail us. The collapse of the government supported mortgage giants Freddy Mac and Fannie May are a clear example of why government intervention in the economy does not work and is the primary source of our economy failure. We need to reduce the government hand in planning the economy and free the small business sector to do what it does best, create new jobs.
Apparently, you missed this part of Senator Obama’s plan for small business:
“Provide Tax Relief for Small Businesses and Start Up Companies: Barack Obama will eliminate all capital gains taxes on start-up and small businesses to encourage innovation and job creation.”
http://www.barackobama.com/issues/economy/
As for the fellow who believes government regulation is necessarily “socialism,” I’d ask him to read some history. If someone told Queen Elizabeth I that she could not regulate commerce for the sake of her people, she might have cut of the offender’s head– and she never even heard of socialism.
Also– we won the Cold War, buddy. We won on the strength of our economy which is built on the middle class in this Country. We have seen what deregulation brings and it is not pretty (savings & loan, energy, banking, airlines). Sensible regulation is NOT socialism– it is common sense.
I’m not voting for either of these Demopublicans but Obama is easily a better choice for small businesses.
Having said that, I’d like to see Obama add the write off for technology and equipment in the first year and get rid of the requirement for 401ks but regardless, Obama’s positions are much better for small businesses while McCain’s mostly help large corporations.
Right regulation is sensible when it benefits the entire community, but the majority of Obamas proposals are not sensible in that respect and if you know your history you would know that many of them are in fact direct violations of the republic this country was created by. Many of his proposals are socialistic and support pure democracy which is very socialistic. Mob rule is not the answer for entrepreneurs. If you were a true super producing entrepreneur/small business owner you would know this. I think you Kim are the one who needs a history lesson. You should relax your clearly biased opinion and read the list again. McCain is the clear leader for many reasons when it comes to the economy in general and also entrepreneurs. Take an economics class. It might help?
Here is a good explanation of why Obama’s tax plan will not work, and is more likely to increase the taxes on small businesses to discourage innovation and further reduce job creation.
Why Obama’s Tax Plan will not Work
http://www.pennyjobs.com/pp/public/Articles.aspx?aid=115
Owning and running a small business today can be Kafkaesque. Entrepreneurs need jump through too many bureaucratic hurdles that stifle innovation and diminish the ability to pursue the American dream. We need a candidate that sides with small businesses and provides an open market environment. It’s that simple.
If think Obama is actually going to cut taxes on businesses while spending more on social programs, your naive.
Anyone making more then 200k ( it’s a moving number ) including small S corp’s and LLC’s will be paying more in taxes. A lot more.
@Curt, I’m afraid I have to disagree with you on the mortgage crisis. It wasn’t socialism, but unchecked capitalism that got us in this mess. People figured out how to create loopholes in the system by reselling packaged mortgages and then took advantage the illusion of safety created by the so-called spreading of risk.
Of course, if we allowed pure capitalism to fix the problem, we’d just let the financial institutions fail along with our entire economy. After all, the economy would go back to equilibrium maybe in 10 or 20 years, after enough people die of starvation. Luckily, we put the big picture ahead of an economic theory and bailed them out. Capitalism is great, but only to a point.
Ever thought about why we need anti-competitive laws (a socialistic devise). We say it’s to “preserve a capitalistic atmosphere,” but capitalism is supposed to be self-regulating, right? Sorry, that theory only works in your Econ 101 textbook.
Whoops! I’d better correct myself before someone else does. In my last post I meant “anti-competitive practices” laws and not anti-competitive laws.
hey curt… get your facts right. Freddy Mac and Fannie May were not government supported until they just got bailed out about a week ago. before that they received none of our tax dollars. it is actually unregulated free-market capitalism that has destroyed the economy, in-case you haven’t been paying attention. the government bailing out these investment giants is the closest we have ever come to socialism and if there had been more oversight and regulation over the outrageous lending and borrowing practices of these falling giants then we wouldn’t be in this mess in the first place. by the way social democracies in Europe have citizens that enjoy on average a higher standard of living then the average american.
I just started a small web design firm. From the proposals outlined here, Obama is a much more appealing canidate for a small startup like me. It seems that mccains policies are geared more towards big established businesses, not the little guys like me. Additionally, the employee support laws while taxing on me are something I would strive to implement individually because it is what I believe to be the right thing to do.
Also, kamullis got it right about the recent bailouts… But I would like to add that both the public and private sectors have the same risk of failure and potential for harm. Becuase both sectors are subject to the same potential risks, the people themselves. If we don’t want to see these things happen again, it is up to us as individuals to do the right thing and think about the ethical social and economic implications of our actions.
Obama is the way to go. I agree that it is the unregulated “capitalism gone wild” policies of the current administration that tanked this thing. Of course there is blame on both sides but ultimately I think that ideaology is hurtful. Capitalism absolutely needs restraints.
Lets go line by line
The goal is to move the economy forward today
Obama
Increase the minimum wage and index the rate to inflation so that it goes up every year
This helps employees and costs small bussiness. – This is a negative to Small business
Wants to eliminate all capital gains taxes for new business start-ups
Great – But how does this help the economy today? 95% of small businesses fail in 3-5 years. We need to help the small businesses that exist today to grow. – This is good but not effective for results now.
Give a $500 credit to business owners to offset the self-employment tax
I’ll take the $500, but if you own a small business how is $500 going to help you really?
Proposes making the R&D tax credit system permanent.
While this is good, I dont know many small businesses wih R&D. This is not a change only to make permanent.
Give a 50% refundable credit for employee health insurance premiums that are paid by the employer
This is positive… for those that offer health benefits and motivates others to offer health benefits.
Suggests that entrepreneurship in rural America is critical – his solution? Create a small-business and microenterprise initiative where investors can get a 20 percent tax credit for $50,000 investments in small businesses.
Nice but for startups.
Require all employers to automatically enroll workers in 401(k)s or IRAs
Nice but how does this HELP a small business? If anything it is additional administration and expense.
Keep the estate tax rate at 45% and increase the exemption limit to $3.5 million
Love it, but how does it help the small business today?
McCain
Lower the corporate tax rate from 35% to 25%
Immediate benefit. This is a positive
Wants to reduce the chances of taxes going up by requiring a three-fifths majority vote in Congress necessary to raise taxes
Love it, keep the taxes from going up at a whim.
Allow small business owners to expense new equipment and technology purchases in their first year
Good but again startup related.
Proposes creating a permanent ban on Internet taxes (states like New York and Texas are trying to push forward an Internet sales tax initiative)
Ban on taxes good for reducing business adminstration.
Make the R&D tax credit system permanent, but change the formula
Same as above. No benefits keeping the same thing going.
Wants to ban cellphone taxes (federal tax code states business people can only write off the portion of their cell phone bill that applies to business and not personal use)
Helps small business save money.
Create a tax credit system to allow people to buy personal health insurance that they can take with them from job to job
Great but more for the employee than employer.
Reduce the estate tax rate to 15% and increase the exemption limit to $5-10 million
Great, but doesn’t help the business today.
Compare both:…..
And looking at items that actually benefit the employer not employee.
It’s really a 10% tax break against 50% credit on health benefits.
If I look at last years taxes it is a tight race.
As a small business owner I’ll take the guaranteed 10%.
It wasn’t unbridled capitalism, but government intervention that forced the government sponsored Fannie Mae and Freddie Mac to take on ill-advised loans and then resell them to Wall Street:
http://article.nationalreview.com/print/?q=M2QwNDhkZTg2OGYzZjkzM2E2NDEwM2U5OGVkNTc0YzU
What is Obama’s plan for businesses generating more than $600k in revenue (as my small business that employs 13 people does)?
bryan,
Actually the bill that McCain co-sponsored was not until 2006, when it was clear it was going nowhere, and it only would have removed all SEC regulation and put in a private advisory board. S 190. The republicans controlled the Senate at that time, it passed committee and never got a vote, but at best it was rearranging chairs on the Titanic.
However, all of the bad mortgages did not cause this mess. A this is a huge mess, look up credit default swaps, http://www.opednews.com/articles/CREDIT-DEFAULT-SWAPS–THE-by-Chuck-Simpson-080924-49.html basically some banks became holding companies and decided to insure mortgages, sounds great, if the buyer doesn’t pay, the bank is covered with insurance, and it likely would have been fine, except anyone and everyone was allowed to pay the premium and collect if a mortgage failed, thousands of people betting against each mortgage. It is the insurance portions of these banks that have broken them, not the mortgage portions.
Make no mistake it was deregulation that started this fiasco, starting with the Gramm/Leach/Bliley Act in 1999
http://library.findlaw.com/1999/Nov/1/127845.html Which allowed banks back into the insurance business if they became holding companies, and was furthered by the Commodities Futures Modernization act of 2000, which allowed them to call insurance swaps, and not be regulated as insurance, thus allowing them to sell multiple policies on the same mortgage.
It is like the mortgages were a drip, and someone decided to go in and cut the faucet off of the pipe and walk away. Since you seem to be a fairly partisan fellow, I am going to point out here that from 2004 until 2006 republicans controlled the house, the senate, and the white house and we know that there were problems because they did hold hearings, and still nothing at all was done.
And knowing your revenue doesn’t give me any idea where you will stand under the Obama tax plan. Nothing is based on revenue, it is all based on net. What is left after expenses and deductions. You can check out the chart here if you are really interested: http://www.washingtonpost.com/wp-dyn/content/story/2008/06/09/ST2008060900950.html
Also, the McCain plan will cut taxes for large corporations that often compete with and squash small businesses, no one is considering that, or that the McCain plan will tax health insurance premiums as income for the employee, so I assume that it would increase what both the employee and the employeer are paying in for social security, as that is based on the income of the employee, and you match what they pay.
Obama’s tax plan will destroy the Social Security system.
Obama says his income tax plan will lower taxes for 95% of Americans. There is just one problem with this, 40% of Americans already pay no income tax. Obama’s response to this is that these people pay Social Security tax. Well, that’s not income tax, but a contribution to their retirement plan. So if he wins and implements his tax plan, for the first time in the history of Social Security, 40% of the people who will get retirement benefits will have paid nothing for them. Social Security will then loose all pretext of being a retirement plan, and will become a national welfare program.
This will cause Social Security to lose public support in a massive way. Leave Social Security contributions out of income tax plans. If you take some peoples income taxes to pay others Social Security taxes, Social Security will be destroyed forever.
http://strategicthought-charles77.blogspot.com/2008/10/obamas-tax-plan-will-destroy-social.html
Well, by now, we all know it is O’Bama. Hope the stimulus $$ work or we may be great trouble.