Over the past few weeks in this newsletter, I have made the case that the policies of the Obama-Pelosi-Reid machine have killed jobs—that they have artificially extended the length of the recession by creating panic over huge deficits and uncertainty about future tax rates and other government-imposed burdens.
This week, I thought I would let small business owners do the talking.
At American Solutions, we have started a Small Business Task Force. Comprised of small business owners, this task force gives us the real world perspective on how the policies of our government have impacted their business. Whenever I travel to a city with American Solutions for a Real Jobs Rally, we always make it a point to meet with local members of the Small Business Task Force to gain their insight. In addition, every month at American Solutions, we take a poll of our Small Business Task Force members.
These sessions are always informative and illuminating. Today, I’d like to share with you what we’ve learned from small business owners.
The Looming Tax Hikes Are Killing Jobs
Unless Congress takes action, the income tax rates used by most small business owners will rise from 33% to 36% and 36% to 39.6% at the end of 2010. However, the Obama-Pelosi-Reid government is showing no indication that they will take action to avoid these tax increases before the election.
That means small business owners have no idea come January how much capital they will have available to pay their workers and make investments.
The threat of these coming tax increases and the uncertainty created by Washington’s inaction is having a devastating effect on small businesses already struggling to make ends meet.
In our August 2010 Small Business Survey, over 50% of small business owners cited the Federal Income Tax as the top government-imposed obstacle to running their business.
In our September 2010 survey, 36% of small business owners polled identified the coming tax increases as creating the most uncertainty for the economy, with respect to the actions of government.
Here is some sample feedback from small business owners:
“Make government consistent so planning can be done and the future is predictable—otherwise owners will simply bankroll and not spend because the future is too uncertain.”
—Bob Hershey, owner of Efficiency Garage Door Service, Inc. in Denver, Colo.
“We can no longer meet payroll taxes due to business downturns and trying to keep current on payments for equipment.”
—Connie Helsel, owner of Helsel Trucking Inc. in Loxley, Ala.
Obamacare and Other Government Regulations Are Killing Jobs
Washington’s mixed indications about preventing the 2010 tax increases is not the only thing creating uncertainty in the job market.
In our September survey, 46% of small business owners identified the implementation of Obamacare as the action by government that is creating the most uncertainty in the economy.
Furthermore, in our August survey, 83% of small business owners identified the federal government as the No. 1 culprit when it comes to imposing the most burdensome taxes and fees.
Amazingly, 27% of small businesses lose more than 10 hours per month complying with state or federal requirements or regulations.
More than half of respondents said they would save between $10,000 and $50,000 annually if regulations were cut in half. Over 20% of small business owners said they would save more than $50,000.
Think of the impact this extra capital could have on job creation in America.
Here is what small business owners said about the impact of Obamacare and other government regulations on their ability to run their businesses and create jobs:
“My business has experienced two problems that affect us directly. 1) Health insurance premiums have increased due to new requirements. Our carrier told us that we cannot change our plan because of the new legislation, which resulted in higher cost than before. 2) The 5% tax on medical device sales has decreased our profitability to the point where we expect a loss next year.”
—Leo Leopold, owner of Medical Murray, a medical device design and manufacturer, in Hawthorn Woods, Ill.
“The trucking industry is paralyzed by taxes and government regulations. There is no incentive to try and make any money when the government comes in at the end of the year and takes more than half of what you have made… Now that things are slow in my business I have to lay off men who have families because there is no money for payroll. If I were allowed to save some money I would have it to pay my employees and to buy some new equipment. If things do not turn around soon, I will have to close the business that I have worked so hard for over the past three years.”
—Linda Almony, owner of LG Almony and Sons in Maryland
The Economic Freedom Act Would Create Jobs
But it hasn’t been all bad news in our surveys and small business roundtables. There is real enthusiasm about a plan to jump start job creation in America: Congressman Jim Jordan’s Economic Freedom Act.
Modeled after key parts of the American Solutions Jobs First Plan, the Economic Freedom Act would:
• Reduce the Payroll Tax by Half for 2010 to provide businesses immediate liquidity.
• Eliminate the Capital Gains Tax to encourage risk taking and investment.
• Reduce the Corporate Tax Rate to 12.5% to improve America’s global competitiveness.
• Permanently reduce the Death Tax to ensure the longevity of small businesses and family farms.
• Provide Immediate Business Expensing for new equipment.
In our September survey, 36% of small business owners said the payroll tax cut would save them more than $7,500.
Eighty four percent say allowing the 100% depreciation of new equipment purchases would have a positive impact on their business.
Nearly 7 in 10 respondents say they would pass their family-owned small business on to the next generation if they did not have to pay the Death Tax.
Here is what small business owners have to say about the Economic Freedom Act:
“Abolishing capital gains and death taxes would help the most and expensing new equipment would be next.”
—Dan Warnock of Baker City, Ore.
“It would allow us to hire a new employee, buy new computer equipment along with new software.”
—Alan Martin of Tyler, Tex.
“This would be huge. We would greatly expand our business, open new stores that we have been waiting to build and hire a lot of people.”
—Ryan Kotula, Prior Lake, Minn.
“The EFA would be a complete breath of fresh air and would provide incentives for me to invest in the growth of my business.”
—Rick Nadler, Fenton, Mo.
“I could actually build my business instead of maintain my business which is what I have been doing for the last year and a half.”
—Sam Lloyd, Mars Hill, N.C.
Washington Is Confused But Small Business Owners Are Not
In the halls of Congress and in the White House, confusion reigns about what it takes to create jobs in America. The Obama-Pelosi-Reid governing machine thinks that more government spending, regulations, and entitlements are what it takes for America to have a healthy economy.
However, amongst small business owners, there is no confusion. They know what it takes to create jobs: lower taxes, less big government regulations, and more freedom.
Perhaps Larry Hayes, President of K-vent/evi Inc. in Dayton, N.J., sums it up best: “Allow small business to grow, stop over taxing and over regulating. I can run my business better than the government can.”
You can read more stories and perspectives of small business owners in our American Solutions Small Business Surveys.
P.S. Callista’s and my new movie, America at Risk: The War With No Name is continuing to garner strong praise for its unapologetic look at the threat from radical Islamism and it’s no holds barred critique of the Obama administration’s utter dishonesty about the nature of the conflict we are in. Click here to read some recent reviews at Gingrich Productions.
Newt’s Quick Links:
• Callista and I will host a free screening of Nine Days that Changed the World on Monday, October 4, in Miami, Fla. Click here for details.
• In his piece posted at Renewing American Leadership, Congressman Frank R. Wolf discusses America’s second deficit—religious freedom and human rights—and how the current administration is failing to address these crucial issues. Click here.
• The Center for Health Transformation has launched a new website dedicated to tracking Obamacare. It’s called Health Reform Report. Click here.
• The Americano reports on the stunning rebuke Hugo Chavez received at the polls in Venezuela Monday. Click here.
• To Try Men’s Souls is now out in paperback. Experience the Battle of Trenton – one of the key turning points of the American Revolution – through the eyes of George Washington, Thomas Paine, and a young private in Washington’s army. Click here.