Originally featured in Roll Call:
Small businesses are critical to our economy. In fact, they generate, on average, 6 in 10 net new jobs. Fortunately for our leading job creators, Congress took an important step at the beginning of the year to protect them and their core customer base by extending income tax cuts for the middle class, as part of the fiscal-cliff deal. But lawmakers now have another economic obstacle in their path: the sequester — a host of automatic spending cuts that began March 1 because lawmakers couldn’t agree on a deal to reduce the deficit. These across-the-board cuts could have dire consequences for the economy and small employers. But all is not lost. There are still some areas in the budget where Congress can quickly pick up revenue to avoid the bulk of the cuts.
Unfair tax loopholes funnel billions of dollars into major oil and gas company coffers every year. Political leaders on both sides of the aisle have pointed to the need to get rid of them, and small employers agree.
Small Business Majority’s opinion polling found three-quarters of entrepreneurs support ending government subsidies to oil and gas companies. What’s more, 6 in 10 believe we should rein in the oil industry even if it means a small increase in gas prices.
If that sounds surprising, it shouldn’t, given our budget crisis. The sequester will reduce funding for everything from defense to infrastructure to small-business loan programs. It will cost the nation 1.5 million jobs and half our economic growth in 2013, according to the nonpartisan Congressional Budget Office.
That’s why spending cuts need to be wielded with a scalpel, not a chainsaw. Closing tax loopholes is part of a balanced approach to this crisis, and entrepreneurs agree it’s necessary. In fact, 92 percent believe big corporations’ use of loopholes is a problem, and three-quarters say their own business is harmed when corporations use them to avoid taxes.
It also doesn’t help small businesses or the economy as a whole when special tax treatment is given to hedge fund managers and Wall Street powerhouses. The controversial “carried interest loophole” lets finance titans pay a top tax rate of 20 percent on part of their earnings, only half of what they would pay at the top rate for normal wages and salaries. This puts other taxpayers at a huge disadvantage, including small-business owners. Our polling shows two-thirds of entrepreneurs believe hedge fund managers should have their incomes taxed at normal rates.
The bottom line is that policymakers concerned about our economy should be leveling the playing field for small businesses, not perpetuating tax breaks for the big boys. The CBO estimates that ending subsidies to gas and oil companies would shore up $40 billion over 10 years and closing the carried interest loophole could raise $21 billion. Together, these measures would significantly offset cuts caused by the sequester.
However, finding short-term solutions to ongoing budget crises shouldn’t be the end goal. Small businesses want policymakers to resolve this problem for the long term so they and our economy have the sustained fiscal certainty they need to thrive.
Original statement issued on June 1, 2012:
Our nation’s smallest businesses—those with 1-49 employees—continue to outpace large businesses in the race to put America back to work. Businesses with fewer than 50 employees created more than half of all new jobs last month, and, from April to May, they boosted the actual number of jobs they generated by 16 percent, according to data released Thursday by Automatic Data Processing, Inc (ADP). Small businesses overall accounted for more than 93 percent of all new jobs last month, while large businesses created just 6.8 percent of new jobs.
These figures underscore the starring role small businesses have in helping lower the unemployment rate, and they’re a reminder that the smallest firms are our country’s primary job creators. These businesses can and will put our economy back on track, but they can’t do it singlehandedly. Legislators must continue pursuing pragmatic economic policies that ensure entrepreneurs have they tools they need to keep rebuilding the economy. We suggest:
- Calling on the Federal Deposit Insurance Corporation (FDIC) to issue bank charters that would supply small firms with more credit. The agency has not issued a single charter this year, despite the dismal lending landscape entrepreneurs continue to face: our national opinion polling found 90 percent of small business owners view credit availability as a problem.
- Passing the Small Business Jobs and Tax Relief Act, which would promote small business job creation by providing a 10 percent income tax credit for increased payroll in 2012 while also extending the 100 percent expense deduction for equipment that lowers owners’ after-tax costs.
- Extending the Production Tax Credit for wind project development, as it supports 37,000 jobs that would be at risk if the credit expires. Not only would extending this credit protect existing jobs, small business owners also indicate it could help generate new jobs: 7 in 10 small business owners believe government investments in clean energy play an important role in boosting the economy and creating jobs now.
With ADP’s latest data highlighting small businesses as invaluable assets to the economy, it’s clear we must support them with pragmatic solutions that address their greatest concerns. We encourage lawmakers to pursue robust policies such as those listed above, as failing to do so would only hamper our fiscal recovery.
Original statement issued April 16, 2012:
It was disappointing to see the Paying a Fair Share Act, or the “Buffett Rule,” fail to pass the Senate today. According to national opinion polling, small business owners believe they’re at a disadvantage when it comes to taxes and agree individuals earning more than $1 million should be taxed at a higher rate. The Buffett Rule was in line with their views and could have been an important first step in much-needed comprehensive tax reform.
Some claim raising taxes on the top 1 percent of Americans would hurt small businesses. However, 57 percent of small business owners agree those earning more than $1 million should pay a higher tax rate, and only one small business owner out of 500 polled reported their annual household income to be more than $1 million.
We wish more small business owners were millionaires, but unfortunately it’s just not the case. We hope policymakers continue pushing for comprehensive tax reform and listen to small business owners while they’re crafting legislation.
Original statement issued on April 10, 2012:
Small business owners believe they’re at a disadvantage when it comes to taxes and support a higher tax rate for individuals earning more than $1 million a year, according to national opinion polling. The Paying a Fair Share Act (also known as the Buffett Rule), introduced today and slated to be voted on in the Senate next week, is in line with the views of our primary job creators and is one piece of much-needed comprehensive tax reform.
Some claim raising taxes on the top 1 percent of Americans would hurt small businesses. However, 57 percent of small business owners agree those earning more than $1 million annually should pay a higher tax rate, and only one small business owner out of 500 polled reported their annual household income to be more than $1 million.
We wish more small business owners were millionaires, but unfortunately it’s just not the case. We hope senators listen to the small business community when this bill comes before them next week.
Statement by John Arensmeyer on February 22, 2012:
The president’s tax reform plan announced today is exactly what small business owners have been asking for. It will create a more level financial playing field for small and large firms, promoting healthy competition that stimulates the economy.
The president’s framework for reforming the tax code will eliminate dozens of loopholes that consistently leave small businesses paying an unfair share of taxes. It will also simplify the tax filing process for small business owners, whose valuable time needs to be spent building their business so they can create jobs and grow the economy.
Our national opinion polling found 91 percent of small business owners believe multinational corporations’ use of loopholes to avoid paying taxes is a problem, and three-quarters say their own business suffers when large companies don’t pay their fair share of taxes. When asked what would do the most to create jobs, small business owners chose eliminating incentives to move jobs overseas.
The president’s announcement today shows entrepreneurs’ voices are being heard. If they’re going to live up to their potential as our nation’s leading job creators and put America back to work, lawmakers must help them by leveling the economic playing field.