WASHINGTON — Hillary Clinton unveiled a new comprehensive plan Tuesday aimed at helping small businesses grow and create jobs.
The Democratic presidential candidate released several new proposals in an effort to streamline the process of starting a small business and make it easier for small businesses to access financing. Among the key components of her plan are the creation of a new standardized tax deduction for small businesses and a move to quadruple the start-up tax deduction for new small businesses.
New business formation has declined 15 percent since 2007, the Clinton campaign said. Between 2010 and 2014, only 20 counties represented half of the new business growth in the U.S., the campaign said.
“We’ll start by cutting the fees and red tape that make starting a business too complicated and too expensive. It shouldn’t be harder to start a business in America than it is in Canada or France,” Clinton said in an op-ed she posted on her LinkedIn account. “Half of Millennials say they’re interested in starting a business and we should be doing everything we can to help more people take that leap — especially Americans traditionally shut out from these opportunities, like women, young people and people of color.”
Clinton’s plan specifically calls for pressing states to clear the red tape on obtaining business and occupational licenses.
According to her campaign, more than 25 percent of working Americans need a license, up from 5 percent in 1950. The average occupational license requires $209 in fees, according to one study cited by the campaign. The aggregate amount of occupational and licensing fees total billions of dollars a year, the campaign said.
She proposed giving federal funding to any state and locality willing to make it cheaper for small businesses to get a start and “meaningfully” streamlining unnecessary licensing programs. The federal funding would be contingent on proposals to ensure safeguard public health and safety.
The plan also calls for working with states to standardize licensing requirements and reduce barriers for people seeking to work across state borders, particularly military families and spouses employed in licensed occupations.
Under her plan, she will provide incubators, mentoring and training to 50,000 entrepreneurs by forming partnerships with local business leaders, community colleges, historically black colleges and universities and Hispanic institutions.
Her plan places a premium on helping small businesses file taxes. The smallest businesses spend an average of 150 hours and $1,100 per employee to comply with federal taxes, which is 20 times higher than for larger businesses, according to Clinton.
“We’re going to create a new standard deduction for small businesses — like the one currently available to individual filers — to simplify how small business account for overhead costs,” Clinton said. “I’ve also put forward a proposal I’m calling ‘checkbook accounting’ that will make filing taxes for small businesses as simple as keeping a checkbook or printing out a bank statement.”
Creating a new standard deduction will help entrepreneurs ranging from those that have bricks-and-mortar stores to those that sell online through platforms like Etsy and eBay, the campaign said.
It is intended to replace a small business owner’s burden of tracking and filing forms for overhead costs, which can include transportation, computer and phone use and maintaining an office.
The “checkbook accounting” proposal could help 4 million small businesses with gross receipts under $1 million, the campaign said.
She is proposing eliminating all of the paperwork involved in filing taxes and record-keeping requirements, as well as simplifying accounting and tax filing for small businesses with $25 million or less in gross receipts.
Under her plan, small businesses would also be able to immediately expense up to $1 million in new investments, such as expanding factories or buying new equipment to expand and create more jobs. It would also quadruple the start-up tax deduction for small businesses to lower the cost of starting a business.
On the financing front, which often serves as the a “primary inhibitor” to starting or growing a small business, Clinton has proposed expanding access to working capital by expanding the Small Business Administration’s working capital guarantee programs and lowering working capital fees for businesses in underserved communities.
She is calling for a 100 percent tax exclusion on capital gains for long-term small business investments and streamlining regulations for community banks and credit unions, which are the backbone of small business lending.
The number of small business loans has fallen dramatically, according to Clinton’s campaign. Small business loans comprised just 29 percent of total bank loans in 2012 compared with 51 percent in 1995, the campaign said.
She has also proposed a reduction of student debt burdens by allowing entrepreneurs to defer student loan payments with no interest while they launch their businesses and expanding the SBA’s Small Business Investment Company program, while supporting new ways to “assess creditworthiness” for small business owners.
Another component of the lending piece of her plan involves giving the SBA administrator the authority to continue providing 7(a) loan guarantees to small businesses “if demand is higher than the yearly cap.”
“We should bring together local, state and federal governments to streamline the regulatory process. And let’s give up-and-coming entrepreneurs a chance to put their federal student loans into a special status, so you don’t face payments or interest when you’re getting started,” Clinton said. “Anyone with a great idea and the drive to see it through should be able to start a business — no matter who you know, who you are, or how much money you have.”
Clinton said she is making it a priority to expand access to credit for underserved communities.
Her plan also calls for simplifying and expanding the health care tax credit for small business in the Affordable Care Act. Small businesses with up to 50 employees would be eligible for the credit under the plan, which would also simplify complex “phase-out and eligibility” rules. More small businesses would be able to pool together to offer retirement plans.
Her plan would increase federal contracting opportunities for women-owned, minority-owned and veteran-owned companies, as well as strengthening the Export-Import Bank.
Taking aim at her challenger Republican candidate Donald Trump, Clinton said she will make it easier for small businesses to fight back when big businesses like Trump’s “repeatedly stiff the small businesses that do work for them.”
Clinton’s campaign pledged to ensure federal regulatory oversight of “proven bad actors” and stop large companies from using litigation to deny small businesses “their right to a remedy.”