Sen. Ted Cruz has officially kicked off the 2016 race for the White House, announcing his candidacy for president Monday and taking the first leap into what’s expected to be a crowded and competitive field for the GOP nomination.
Cruz has made quite a name for himself during his first two years in Washington. Championing a smaller government that doesn’t infringe on individual liberties, he has brazenly refused to back down from that call, even if it means infuriating his own party leadership or — in one instance — shutting down the government.
The Texas Republican has also been one of the loudest critics of what he likes to call the Obama economy, under which Cruz says the private sector has been overburdened by regulations and tax rules have been set up to benefit the rich. That combination has particularly plagued small businesses, he says — and that has to change.
“Every single time in our history that we have simplified taxes, reduced the burden, reduced the compliance cost, and simplified regulations so that small businesses, which create two-thirds of all new jobs, can do that, we’ve seen an economic boom,” Cruz said during an event in January, sharing a stage with Sens. Marco Rubio (R-Fla.) and Rand Paul (R-Ky.), both of whom are also considering a run at the nomination.
So, what else would a Ted Cruz White House mean for business owners? Here are five things entrepreneurs and small employers should know.
He favors a flatter, simpler tax code — but keep the deduction expensing
Cruz has repeatedly stumped for a total overhaul of the U.S. tax system that leaves the country with a “simple flat tax.” Currently, he says, the system favors large corporations and wealthy individuals over small businesses and middle-class Americans, the latter of whom don’t have an army of lawyers and accountants to help them navigate a tax code that Cruz recently noted has “more words than the Bible.”
“We should let taxes become so simple that they could be filled out on a postcard,” Cruz wrote in a recent editorial column. Once that’s the case, he added, “we should abolish the IRS and end its abuse of power and violation of Americans’ constitutional rights.”
That said, there appear to be some permanent additions he would make to the tax code, including one that is intended to help small businesses but expired at the end of last year. In short, the rule allows small companies to immediately expense investments in, for example, buildings and large equipment. It’s one of several so-called “tax extenders” that tend to disappear at the end of every year, only to be retroactively reinstated by Congress months later.
During the forum with Rubio and Paul, Cruz identified that expensing rule as one of several “critical elements of the tax code.”
“Things like deducting business expenses that go right to small businesses. … I couldn’t in good conscience vote to strip away that tax treatment,” he added.
He wants to repeal Obamacare, rolling back regulations
Not a shred of gray area here. Cruz has spearheaded several attempts to defund the president’s signature legislative achievement, including a failed attempt in 2013 that eventually led to a 17-day shutdown of the federal government. And while some in his party have since shown a willingness to try to improve the law, Cruz hasn’t wavered from his pledge throw it out altogether.
In part, his distaste for Obamacare stems from its effects on small companies.
“Half of small businesses say they will either cut hours to reduce full-time employees or replace full-time employees with part-time workers to avoid the mandate,” Cruz said last year on the Senate floor, citing Chamber of Commerce surveys about rules that require some companies to provide health insurance to their employees. He later called the Affordable Care Act “the biggest job killer in this nation.”
Though recent data don’t quite support that level of hyperbole, the numbers don’t look good for small businesses under the health-care law. Surveys released last week by the National Federation of Independent Business suggest that premiums have continued to soar for small businesses, and one in 10 say they have had their plans cancelled as a result of new coverage requirements in the Affordable Care Act.
While Cruz has pointed to the health-care overhaul as the most egregious example of the Obama administration sticking its hands too far into the private sector, he says it’s hardly an anomaly.
“Over the last six years, federal regulators have been on small businesses like locusts,” Cruz said during a speech earlier this month in New Hampshire. He later emphasized that “the most effective levers the government has to facilitate the private sector and small business creating jobs are tax reform and regulatory reform.”
“If small business is prospering, growing and creating jobs and opportunities, that lifts all ships,” Cruz added.
He’s adamantly opposed to a higher minimum wage
One of several issues that have divided small-business owners is raising the minimum wage. Many employers have said that lifting the wage floor, as President Obama has fought so hard to do, would force them to pull back on hiring and even shrink their workforce. Others believe that consumer spending would tick up if workers had more money in their pockets, leading to stronger sales for their companies and an overall healthier economy.
Cruz, on the other hand, isn’t the least bit split. He has staunchly opposed raising the minimum wage.
“I think the minimum wage consistently hurts the most vulnerable,” Cruz said during the event with Rubio and Paul in January. When asked about raising the minimum, Cruz has repeatedly said that it would make it harder for Hispanics, African Americans, and young Americans — groups already facing high unemployment rates — to find work. That’s because companies that employ low-skill and entry-level workers may be forced to cut back on the number of minimum-wage employees they can afford to pay.
Cruz also takes the opportunity, as he did in New Hampshire, to tell the story of his father, who immigrated to the U.S. from Cuba and took a job washing dishes for 50 cents an hour (his father later became a small-business owner and is now a pastor).
“If we had come in and made the minimum wage $2 an hour, you know what would have happened?” Cruz asked the moderator. “They would have fired my dad and they would have bought a dishwasher.”
He’s a big fan of the Keystone XL Pipeline
Ahead of the midterm elections last fall, Cruz penned a column in USA Today outlining 10 priorities he believed a Republican-led Congress should focus on in 2015. At the top of the list was a pro-jobs energy agenda — starting with the Keystone XL pipeline.
“A Republican Congress should immediately help Americans get more jobs by embracing America’s energy renaissance,” Cruz wrote. “This means passing legislation to make it easier to build energy infrastructure, such as the Keystone pipeline.”
Small-business groups have largely lined up in favor of the controversial pipeline, which would create a network capable of transporting oil from Canada to the Gulf of Mexico. Most Republicans are behind the proposal too, earlier this year pushing a measure to complete construction of the project through Congress. Obama vetoed the legislation, arguing that its environmental harm would likely outweighs any economic windfall.
He’s not such a fan of the Ex-Im Bank
On the economic policy section of his campaign Web site, Cruz touts several actions he has taken to try to get the the economy back on track. Not surprisingly, the first item mentioned is that he led the charge to dismantle Obamacare.
Next on the list? His attempts to eliminate the Export-Import Bank.
Not widely discussed outside of Washington, the Ex-Im Bank, as it’s often called, provides relatively low-cost financing to foreign buyers of American products and services. It’s programs are meant to make American goods more attractive overseas, helping U.S. companies export. However, there’s debate over whether those programs support small or large businesses.
Cruz is firmly in the latter camp.
“The Export-Import Bank is big businesses’ big-government bank backed by U.S. taxpayers,” Cruz wrote in another column last year. The agency’s current charter expires in June; without renewal from Congress, it will be eliminated.
That wouldn’t bother Cruz, who added: “There’s nothing inherently wrong with big businesses … but they don’t need special handouts from government.”