Silke Mayr As we approach the November 5th election, small business owners—considered the most trusted institution in America—are expressing unprecedented levels of uncertainty. Both political parties are keenly aware of their concerns and are tailoring their messages accordingly.
Despite the significant divide between Democrats and Republicans, one consistent theme is that small businesses stand to benefit regardless of who wins. Politicians have historically catered to this sector, a sentiment famously echoed by Ronald Reagan in 1983, who quipped that “every week should be Small Business Week, because America is small business.” This makes sense: small businesses employ nearly 46% of all private sector workers and have generated over 60% of new private-sector jobs since 1995.
In a time when public trust in institutions is declining, small businesses remain a beacon of reliability. According to Gallup’s latest survey on confidence in institutions, 68% of Americans trust small businesses, while only 16% trust large corporations and a mere 9% have confidence in Congress.
Yet, despite this trust, small business owners are anxious about the election’s impact. The National Federation of Independent Business (NFIB) has tracked uncertainty levels for over 50 years. In September, their gauge of uncertainty surged 11 points from the previous month, reaching its highest level in the survey’s history, surpassing even the uncertainty felt during the 2020 pandemic and presidential election. Meanwhile, the NFIB’s Optimism Index has remained low at 91.5, marking the 33rd consecutive month below the historical average of 98.
On one side, former President Donald Trump is a familiar figure for small business owners, having garnered 64% approval before the pandemic, according to a February 2020 CNBC/SurveyMonkey poll. In contrast, only 38% of small business owners approved of President Joe Biden in a recent September survey.
Conversely, Vice President Harris has been vocal about her plans to support small businesses, including a significant tax deduction to facilitate new ventures. Todd McCracken, President of the National Small Business Association (NSBA), notes, “Both parties want to appeal to the small business community, but they take very different approaches.” Republicans tend to favor tax cuts and deregulation, while Democrats, particularly Harris, focus on easing the path for new business formation.
Jim Croley, who has operated the Wooden Keg Tavern in St. Clair, Pennsylvania, since 2005, illustrates the challenges many face. While he has managed to keep his business afloat despite rising costs, he wonders how other local businesses without a loyal clientele survive. “You have to run an ultra lean operation these days,” he reflects, expressing uncertainty about how the election will affect small businesses. He appreciates Harris’ focus on supporting new growth but emphasizes the importance of helping existing businesses thrive, which aligns him more with Republican proposals.
Harris’s outreach to small business owners—a traditionally Republican demographic—is strategic. Research from American Progress reveals that the pandemic spurred a notable rise in entrepreneurship, with over 5.2 million new business applications from 2021 to 2023, a 34% increase from the pre-pandemic years. This surge was particularly prominent in areas with large Black populations and was evident across 49 states and Washington, D.C. Additionally, a 2023 study found that half of Gen Z individuals aspire to start their own businesses.
During Biden’s presidency, the Small Business Administration has made strides to support startups, including a change that allows successful entrepreneurs to access nearly unlimited funding for multiple small businesses. As Democrats also target large corporations with antitrust actions and increased regulations, supporting small businesses helps counteract accusations of being anti-capitalist.
Richard Trent, executive director of The Main Street Alliance, argues that small businesses may not win regardless of the election outcome. He believes that while small business owners lean Republican, many see value in Harris’s policies aimed at fostering startup growth in underserved communities. Trent acknowledges that the Republicans’ messaging has been effective but critiques their plans as unsustainable for small businesses.
As the election approaches, key tax priorities remain consistent for groups like the NSBA. One major concern is the future of Section 199A, the Qualified Business Income deduction that allows certain business owners to deduct up to 20% of their income on personal tax returns. This deduction, part of Trump’s 2017 tax overhaul, was intended to align tax rates for small businesses with the reduced corporate tax rate but is set to expire at the end of 2025. Critics argue it disproportionately benefits wealthier owners, though bipartisan support exists for extending the deduction.
Republicans aim to make the 199A deduction and other Trump tax cuts permanent. “Small businesses flourished under President Trump, with small business sentiment hitting a record high in 2018 due to the Tax Cuts and Jobs Act,” said Brian Hughes, a senior advisor for the Trump Campaign. “Allowing this deduction to expire would harm small businesses, which are vital for job creation.”
Harris has proposed increasing the tax deduction for startup expenses from $5,000 to $50,000, which would benefit new entrepreneurs but not existing businesses. While Harris has laid out her small business agenda, it remains unclear how committed she is to extending Section 199A.
John Arensmeyer, founder of Small Business Majority, suggests that Harris should reform the 199A deduction but notes that Trump’s small business proposals have been vague, leaving observers to speculate about his intentions.
Josh Radman, founder of Presidio Advisors, highlights that changes to the 2017 tax cuts will significantly impact how he advises his clients. Yet, like Croley, his voting decision is influenced by multiple factors beyond business.
While Harris has made efforts to engage with small business owners, Trump continues to maintain strong support among them. A recent poll showed him with a 12-point lead over Harris, with 51% of small business owners rating him as the better candidate for their needs. This support persists despite a fairly balanced political affiliation among small business owners, with 35% identifying as Republican, 30% as Democrat, and 33% as Independent.