Let’s come together in 2018 to support policies that help our small business job creators.
by ALFREDO ORTIZ
Along with the New Year come New Year’s resolutions. Some pledge to alter their diet, while others vow to exercise more. These individual pursuits are all fine and good, but as an American society, we should all maintain an additional joint resolution that will bolster Main Streets across the country and strengthen the American Dream through giving small businesses a helping hand.
Because when small businesses prosper, all Americans benefit. As AAHOA members know, small businesses are the backbone of the economy and the core of our financial stability. There are 29 million of them and they employ almost 60 million people – producing goods and services that contribute considerably to the U.S. gross domestic product. Small businesses are also responsible for two-thirds of all new job creation.
Not only do small businesses benefit the U.S. economy from a pure employment and output standpoint, but they provide Americans from all backgrounds the opportunity to be entrepreneurs and realize the American Dream. In fact, eight million small businesses are minority-owned in the U.S. and 10 million are owned by women.
But what kind of policies will foster stronger small businesses and expand the benefits that accompany them?
Well the short answer is simple. Small business owners know how to better use their resources than government bureaucrats – whether that be revenue, labor or means of production. So initiatives that give small business entrepreneurs more control over their operations are the very policies that will further strengthen them and the communities they reside in.
More specifically, there are three major policy prongs that impact small businesses substantially – taxes, regulations and access to credit.
Taxes are the most direct way that government can hamper the effective operations of small businesses. Obviously, some tax is needed in order to ensure continued operations of the federal government, but tax rates that are too high will restrict business growth – which will in turn negatively affect job creation, wage levels for employees, and number of locations. A reduction in the tax rate would simply allow entrepreneurs to reinvest more back into the business. Thus, a tax cut for them is an economic boost for everyone.
Overregulation has a similar negative effect. Over-burdensome rules and statutes imposed onto businesses create an environment where more financial resources – not to mention time – are needed to just comply with government regulations. Removing these barriers will allow small business owners to operate more freely without being forced to expend considerable resources for no business benefit.
Some examples of these harmful policies include the joint employer mandate, which balloons restrictions on franchised businesses because of increased legal liability, and the regulations associated with the Affordable Care Act. They have caused the cost of supplying employer-sponsored healthcare to skyrocket, making it unaffordable in many instances.
The last prong deals with the ability of a small business entrepreneur to access credit lines that could be used to launch a new business or grow an existing one. In this situation, it’s all about strengthening small community banks, because they are usually the entities that supply these particular types of loans. However, laws like Dodd-Frank weaken this relationship by placing undo regulatory and compliance costs onto these community institutions – effectively forcing them out of the market. The result is less community banks, which means reduced start-up capital for small businesses.
While millions of Americans are working hard to stay true to their individual New Year’s resolution, let’s also come together to support policies that help our small business job creators in 2018. Everyone can toast to that. ■
Alfredo Ortiz is president and CEO of the Job Creators Network.