PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

With Recovery Sputtering, Why are Big Tax Hikes and More Regulation Still on the Table?

By at 8 October, 2021, 10:28 am

by Karen Kerrigan –

So, where do President Biden and Democrats go from here?

They are going back to the drawing board, back to inner-party negotiations to come up with another big spending plan that they hope will pass muster with key Senate Democrats. Published reports show the new range of the bigger package coming in at $1.9-$2.2 trillion (remember, this is government spending above and beyond the $1.2 trillion infrastructure package) – which is still A LOT of money that will be funded through tax increases on private sector businesses and investors. 

As a back drop to this, the latest IBD/TIPP ECONOMIC OPTIMISM INDEX finds economic confidence turning gloomier “amid Washington’s fiscal profligacy.” As noted in a TIPPS INSIGHT post on the latest Index data:

The IBD/TIPP Economic Optimism Index, a leading measure of consumer confidence, declined 1.7 points or 3.6%, from 48.5 in September to 46.8 in October. The current drop follows a steep 5.1-point decline in September.

After eight consecutive months in the positive territory, the index entered the negative territory in September.

Confidence in October is 21.7% below its pre-pandemic level of 59.8 in February 2020.

Of course, small business owners continue to grind through a host of challenges facing their operations on top of digging out of the last year and a half. The latest Alignable survey found:

Fewer businesses are generating revenues at levels close to where they were prior to this crisis. Right now, 43% of all small businesses have half or less of the monthly revenue they earned prior to COVID.     

85% of small businesses are experiencing higher inventory and supply costs.  Within that group, 44% have been able to increase prices.

 62% of small business owners cited difficulty rehiring or finding new employees (up 3 points since August).

The challenges noted above are consistent with last week’s Census Bureau Small Business Pulse Survey (which did not shift much in this week’s survey), as I highlighted in a Small Business Insider blog post:

Business owners are not only working to dig out of revenues holes from the Great Shutdown that followed the immediate COVID shock, but they currently face an array of complex challenges that are taunting their efforts to turn the corner toward recovery.

Navigating these challenges requires ample capital to deal with new and unexpected costs, to compete for labor, to change gears by investing in new models, and to generally ride out the uncertainties that lie ahead. Draining capital from businesses and the private sector through massive tax increases, as proposed in the Democrats $3.5 trillion spending plan, would negatively impact all types of businesses across the country – not just the wealthy and big corporations.

Small businesses – indeed all businesses – need the government’s support in the way of policy stability. “Not new tax hikes or regulatory burdens,”  as I wrote in the blog.

That is exactly the message SBE Council and its team are sending to President Biden and Congress each and every day! Let’s get through this crisis by supporting our businesses, not harming them further.

Karen Kerrigan is president & CEO of the Small Business & Entrepreneurship Council.

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