Kamala Harris says she will provide voters with the opportunities they need to become successful business owners. With a smile and a straight face, she gave as an example of this a promise to increase the current $5,000 tax deduction for small business startup costs to $50,000. Donald Trump, in that same televised debate, gave himself as an example of how a smart person such as himself could get rich: “My father,” he said, “gave me a small loan of a million dollars.”  Of course a loan of a million dollars is a lot more than a tax credit of $50,000 (and in fact Trump got much more than this from his father). But even setting that aside, Harris should be ashamed of herself for cynically promoting the idea that starting up a small business is a path out of poverty when she should know full well that this is a myth.  

According to data from the government’s Bureau of Labor Statistics, approximately 20% of small businesses fail within the first year. By the end of the second year, 30% of businesses will have failed. By the end of the fifth year, about half will have failed. And by the end of the decade, only 30% of businesses will remain — a 70% failure rate. Those who have put not only the efforts of themselves and their family members, but often their life savings, into these startups are left with nothing but debts. 

What is a “small business?” To most people the term “small business” is used to describe mom-and-pop retail stores, or home-based day-care centers, or perhaps those of plumbers or even street vendors. This is very different from the government’s use of the term. In 2024 there were 5.6 million of what were defined as “firms” in the United States, but more than half of them had only 1–4 employees. The most basic definition of a “small business” that is used by the Bureau of Labor Statistics and the Small Business Administration is a firm with 249 or fewer employees. But depending on the industry, the term may be used describe a business that has as many as 1,500 employees and maximum gross receipts of up to  $38.5 million per year.

This would not be what most people would desribe as a small business.  The term “business” or “firm” is used to include the many, many millions of people who are, or might describe themselves as self-employed, including gig workers such as those employed by Uber. These are classified as “contractors” for tax purposes and as such excluded from the benefits of wage-earners such as minimum wage laws. Maybe Harris could help them. Or she could consider how landlords could be restrained by not only residential but also commercial rent control. Many local stores are driven out of business by increases in the rents that are demanded by the landlords who have successfully gentrified their neighborhoods.  

Harris’s rhetoric is designed to appeal to the many people who understandably would like to escape lousy jobs and become their own bosses. But what in fact is a “$50,000 tax credit”?  It is not a grant, or even a loan of $50,000. It is only the amount that can be used as a deduction in calculating the taxable income of a business. Those who start up a business that is indeed small are well aware that they are unlikely to make any profits at all in at least the first three years, so they have no taxable income. A tax deduction is meaningless to those who pay no taxes!

The reason so many small businesses fail is not because those who set them they lack the supposed “intelligence” or “entrepreneurial skills” of Trump, let alone their inability, compared to Trump, to evade prosecution for criminal activities such as his underpayment of wages and stiffing of contractors. Their failure is due mainly to the fact that the whole history of capitalism is one in which big businesses out-compete their smaller competitors. The profits that they make are used to invest in ever more advanced equipment that reduces the cost of their products. As a result, first supermarkets, and then supermarket chains, do, as an example of this, grow at the expense of small bodegas and delis. This is part of the story of the ever-increasing inequality between working people and the owners of those big businesses. Harris has no interest in addressing this, let alone preventing it. She, like Trump, is a candidate of big business.  

The net income of those who work today in truly small, family-owned and family-staffed businesses is most commonly less that of those employed as wage-earners. Immigrants in the United States, for example, have, over the centuries, started at the bottom in this way because they were excluded from relatively well-paid factory and office jobs. Instead they have worked as casual laborers, for whom the term “self-employed” is an indication of misery rather than wellbeing. Or, and this is important to note, they have worked in the businesses of their extended families or other members of their communities. What was true in the past is as true today for the immigrants who are driven from their own countries by poverty, war and climate change.

Harris’s proposal for a $50,000 tax credit for what she terms “small businesses” 

is an insult to those whose work does not provide them with the “opportunity” for lives free from poverty and threat of poverty. 

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