If you have been paying attention to our upcoming presidential election, there are two things that should be obvious: first, Mitt Romney and Barack Obama are desperately trying to get your vote. Second, they both would like to “fix” the economy and help small business. But how are each candidate’s plans and policies likely to affect small businesses?
Here is a basic breakdown on each candidate’s stance on key issues that may affect your business.
Each candidate sticks to their traditional party line on taxes: fundamentally, Obama would like to tax wealthy Americans more, while Romney believes that lowering taxes will stimulate the economy.
Romney is in favor of extending the tax cuts imposed by the Bush Administration in 2002. He advocates no taxes on interest, dividends or capital gains, and believes this will result in more money in the hands of the middle class thus stimulating the economy. Romney is in favor of abolishing the estate tax and ostensibly wants to lower the tax rate on middle-income Americans. Furthermore, Romney would like all investment income to be untaxed.
Obama supports a progressive tax system that taxes people who earn more at a higher rate. He has stated that he would like to return to the tax rate that was in place under Bill Clinton for people making less than $250,000 per year. The president has proposed legislation that would impose a minimum tax rate of 30 percent on millionaires. Obama recently approved the Middle Class Tax Relief and Job Creation Act that extended two percent social security payroll tax cuts and unemployment benefits, while simultaneously preventing cuts to the Medicare program. Obama has stated that he will not raise the tax rate on Americans earning less than $250,000 per year.
With the unemployment rate at near-record highs, both candidates have pledged to create millions of new jobs if elected.
Mitt Romney believes that his tax plan will create 7 million new jobs by allowing small businesses to keep more of the money that they earn. If elected he plans to aggressively pursue equalizing the trade deficit with China and improving job training that he estimates will create 12 million new jobs. Romney also advocates an energy policy that will create 3 million new jobs.
Barack Obama similarly believes that his tax plan will create new jobs. Obama would like to lower the effective tax rates paid by people making less than a quarter of a million dollars annually. The President claims that “pass-through” taxation regimes, such as those enjoyed by sole proprietorships, partnerships and LLCs, will benefit small business and promote new hiring. Obama also believes that his energy policy, particularly his green-energy initiative, will create new jobs.
Below is a comparison of the main job creation strategies advocated by the candidates.
Barack Obama on Job Creation
Mitt Romney on Job Creation
Both candidates claim that their plans will improve the economy and help small business owners, but analysts (and potential voters) differ on their beliefs as to the potential success of each plan, partly because the economy is such a complex and multi-faceted issue. In the end, many voters will likely choose their candidate based on the candidate’s party, personality, ideology or beliefs about the roles of government and business, rather than based on the specific economic policies advanced by each candidate.