The Importance of Small Business for Republican Success in Midterms

Republicans looking to win the 2026 midterms should focus on America’s small businesses. The White House has already taken steps, marking National Small Business Week to acknowledge their role in the economy.

Impact of Small Businesses

Small businesses, defined as companies with 500 or fewer employees, are critical. More than 36.8 million such businesses operate in the U.S. They employ 46% of the private sector workforce, translating to over 62 million jobs. The majority, over 96%, have fewer than 10 employees, including grocery stores, laundromats, and professional services. Between 1996 and 2024, small businesses added over 20.7 million jobs.

They drive innovation, with those having 5-9 employees holding more patents per employee than larger entities. Small businesses also contribute to the reindustrialization of the U.S., as 98% of manufacturers have fewer than 500 employees.

Challenges Faced by Small Business Owners

Owning a small business comes with significant challenges. The Tax Foundation highlights that taxes consume 20-30% of their income. A quarter of these owners spend over $10,000 annually on tax and regulatory compliance, dedicating 200 to 300 hours yearly, equivalent to 32 business days, to these tasks.

The Trump administration’s tax reforms, such as raising the Section 179 expensing cap to $2.5 million and 100% bonus depreciation, benefited small businesses. These reforms also made the 20% Qualified Business Income (QBI) deduction permanent. Repealing these under a Democratic-led “tax the rich” initiative could harm small businesses financially.

Political Affiliation and Preferences

Small business owners show a tendency to support the Republican Party. A Stanford study found that business owners are more likely to vote Republican by 18 percentage points compared to non-owners. Their political inclination stems from experiences with high taxes and regulations. Business owners leaned towards Republicans, as they promised relief from fiscal burdens and regulatory challenges.

Doctors owning practices are slightly more inclined to align with the Republican Party, being 2.5 to 5 percentage points more likely to register as Republicans, and more willing to donate to its candidates.

Strategic Moves for Republicans

Republicans can tap into a 36-million strong constituency of small business owners. These businesses not only employ nearly half of the U.S. workforce but have also driven two-thirds of job growth in the last 25 years. Notably, one quarter of new businesses in America are Hispanic-owned, providing a chance for Republicans to strengthen their Hispanic voter base.

• Launch information campaigns targeting small business founders, emphasizing benefits from Trump’s tax policies.
• Showcase support for the startup culture and the traditional values small businesses uphold.
• Demonstrate alignment with the diverse interests of small business owners, incorporating them into the Republican vision.

Effective political parties arise from shared interests, not mere ideologies. Republicans can highlight their support for entrepreneurs and small business vision, beyond appealing to major investors and tech billionaires.