As President Obama proposes tax breaks and new lending programs for small businesses, I have to wonder: Do small business owners and entrepreneurial MSPs really want more help from the government? Or are MSPs really seeking fewer barriers to doing business? Here’s what I mean.
Within our own small business (Nine Lives Media Inc.), CEO Amy Katz has spent hours dealing with government regulations and tax laws in Massachusetts (where we’re headquartered) and in New York (where my office is located). Most recently, New York implemented a commuter tax that impacted our business. Here’s the irony: I don’t commute. And I’m actually promoting a green environment by working from home and keeping my car parked in the driveway.
Yet we’re dealing with a commuter tax… A year ago, we were dealing with payroll tax questions between New York and Massachusetts. And before that… well, you’re starting to get a feel for daily distractions that waste Amy’s time and our company’s money.
And what about MSPs? Some managed services providers are worried about potential tax issues tied to recurring revenue streams. The debate started in February 2010. I don’t sense panic within the managed services community, but I do sense that MSPs are speaking far more regularly with their accountants to make sure they’re clear on local tax codes.
Meanwhile, In Washington…
On the political front, President Obama is promoting a bill that would establish a $30 billion fund to help community banks offer loans to small businesses, plus $12 billion in tax breaks for small businesses. Legislators are tentatively scheduled to consider the bill on Sept. 14, according to MarketWatch.
I certainly applaud better lines of credit to qualified small businesses. Still, The Wall Street Journal offered this perspective on President Obama’s proposal:
“The chief economist at the National Federation of Independent Businesses said today that small business doesn’t need more tax relief. Instead, he said, Washington should aim its firepower at consumers so they begin spending money and creating demand for the products and services small companies provide.
“If you give a small business guy $20,000 he’ll say, ‘I could buy a new delivery truck but I have nobody to deliver to,’” said William Dunkelberg, chief economist for NFIB.
Rather than aim more tax relief at business, Dunkelberg said Washington should extend the Bush-era tax cuts for everyone – including those making above $250,000.”
Put the Spotlight on Success, Not Failure
With or without the government’s help, I believe small businesses will pull the U.S. out of its economic slump.
To get started, we need to spend less time listening to what Washington may — or may not — do for us. Next, we need the media and the government to focus more on success rather than failure.
Here’s an example:
- During a recent CNBC broadcast, a former inventory manager for a New Jersey car dealership described how difficult it is to find work. He’s spent recent months reaching out to car dealerships up and down the East Coast, looking for a new job. I’ve been out of work and I know how painful it can be to stay motivated during an extended job search.
- My question: Why is that unemployed inventory manager looking for work in the automobile industry? Wouldn’t it be wiser to apply that inventory management skill-set in a different vertical — say, high-tech distribution?
As the media laments lost industries and Washington debates that small business bill, there are 5000 examples of successful, privately held, fast-growing small businesses in the US.
Skeptical? Just check out the latest Inc. 5000 list, which also contains more than 600 IT service providers.
With a simplified tax code and less government interference, I suspect those 5,000 companies would be growing — and hiring — even faster…
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Posted In: Finance | North America
Tags: Commuter Tax | Inc. 5000 | President Obama | small business lending | Small Business Loans | Small Business Tax Breaks
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Joe, good article and great question. My opinion is that President Obama is in a lose/lose situation. No matter what he does, even if it helps, there will be people screaming as if their life is coming to an end. If they pass the small business tax cuts (which normally small business would be jumping up and down about) and let the Bush tax cuts expire (for only 3% of the country, remember). The millionaires and billionaires, as well as those making $250,000/year will scream everything is over and I have to shut it down, which is a huge exaggeration on so many fronts. The republican party frames it as if President Obama raised taxes on everyone, when that is just a marketing ploy, no more, no less and has about 1% of truth in it.
If he does not pass the small business tax breaks and renews the Bush tax cuts for everyone, including the top 3%, the deficient rises even faster and the republican party frames it as him adding even more to the deficient and not doing anything to help small businesses. The WSJ rips him, even more than they do now and companies will still keep sending jobs overseas (hard to beat $2.00/hour, except slave labor , maybe that’s next)
Now, I’m not an extreme liberal or a democrat. I’m an independent moderate, but I’m honest about what I see and hear. I think most of us just want answers that will fix the problems, but the only people talking and that have microphones happen to be those with somewhat extreme agendas.
Maybe the discussion should be what regulations should there be? There should be regulations to encourage businesses to take risks and hire, and innovate. There should also be regulations to protect consumers and investors from bad business practices (not that stuff like that ever happens). We need to find a balance, but one side saying regulate everything and the other side saying get rid of all regulations is not just unproductive, it is insane and not working. We need common sense reform and we need it now.
1. Simply the tax code for individuals and businesses.
2. Reward businesses who hire American workers with a per employee tax break.
3. If a business outsources overseas more than 7.5% of their employee base, they do not receive certain tax breaks.
4. Healthcare: I’ve look at some numbers and honestly a single payer universal healthcare system would be beneficial for individuals, businesses, doctors, hospitals, and more. Right now the average labor cost for healthcare is an additional 10%-15%, A single payer system could reduce this to around 3.3%, making the total about 4.75%. What could you do with that extra cash? Anything you want.
Okay, my head is spinning, good day.
John: Thanks for taking the time to share some more extensive thoughts. So, are you going to run for office and implement the changes for us?
I guess my biggest frustration with Washington is all the finger pointing. So much for reaching across the aisle to get things done…
-jp