Small Business Impact on Economic Recovery

There is talk everywhere I go about our struggling and failing economy.  It has created widespread concern and uncertainty about our future.  I don’t truly understand how we got here and why.  I do feel it is quite serious and even scary as I watch families around me struggle.  I know of friends parents who are out of work, people are losing their homes and it doesn’t look like this holiday season is going to be very merry for many American families.

I believe that the government needs to help us in order to begin economic recovery.  One of the ways they can help is in the area of job creation and stability for small businesses.  The government needs to assist in creating an environment where small businesses can succeed and grow.  Small businesses are considered to be those with less than 500 employees.  An Analysis of Small Business and Jobs developed by the Small Business Administration in March of 2010 sated:  “While small and large firms provide roughly equivalent shares of jobs, the major part of job generation and destruction takes place in the small firm sector, and small firms provide the greater share of net new jobs.” It also states that, compared with large firms, small firms also employ higher shares of individuals with low educational attainment – a high school degree or less (63.2%); high school-aged workers (63.8%); individuals 65 or older (65.6%); disabled workers (59.4%); and rural workers (64.3%). The unemployment rate for college graduates is 4% compared to 11% for those with only a high school diploma.  According to the SUSB (Statistics of U.S. Businesses), 95 percent of employers began with fewer than 20 employees and it is estimated that 90 percent of employers had fewer than 20 employees in 2006. It is said that small business provides jobs for over half of the nation’s private workforce.  A press release by Dr. Chad Moutray, Chief Economist for the Office of Advocacy stated: “Small business drives the American economy.  Main Street provides the jobs and spurs our economic growth. American entrepreneurs are creative and productive”.

For small businesses to grow, they need a reduced tax burden so that they can plan and make investments.  The unemployment numbers and the statistics for small business speaks volumes.  Listed below are a couple of proposals that can aid in small business growth and stability, presented by Linda McMahon.  Linda is running for the Connecticut seat in the senate in 2012.

Create a Business Friendly Tax Policy

·         Restore and make permanent the Research and Development tax credit to promote innovation.

·         Allow businesses to deduct 100% of the cost of any capital expenses for equipment, technology, software, or buildings from their taxable income in the year they buy the asset.

o    This stimulates investment in American businesses and increases the productivity of American workers.

·         Eliminate the employer portion of the payroll tax for one year

o    Expand recent proposals in Congress to all current employees and new hires legally authorized to work in the United States. Allow the reduced rate for one year from the date of enactment for small businesses as defined by the Small Business Administration.

The government needs to help the small business to not only survive this recession; they need to utilize the rapid impact that small business can have in job creation,  allow some tax relief to these businesses, and the economy will all share in their success.

Sources:  http://archive.sba.gov/advo/research/rs359tot.pdf

http://usgovinfo.about.com/od/smallbusiness/a/sbadrives.htm

http://www.linda2010.com/issues/economy/