2023 Policy Agenda for Entrepreneurs and Small Businesses

By SBE Council at 6 February, 2023, 11:38 pm

By Karen Kerrigan –

Entrepreneurs and small business owners continue to grind it out under challenging economic and marketplace conditions. However, many are hopeful about the future of their businesses and ability to compete. Thankfully, digital tools and platforms are making it easier to find, keep, service, and communicate with customers and prospective customers, and to operate businesses more efficiently and productively. These tools, which have been critical in driving new business applications and creation – and made possible through broadband connectivity and innovation – are powering the entrepreneur’s ability to stay nimble, to innovate, and adapt to the rapid pace of change in the marketplace. Yet, small business owners continue to face hiring challenges, high costs, uncertain economic conditions and policy threats that have or could restrain their operating capacity, and the revenue they need to survive and grow. This makes the advancement of sound policy even more critical to U.S. small business success.

SBE Council’s policy and legislative agenda for 2023 will focus on measures that provide relief to small businesses and that rein in policy threats that are putting undue pressures on their decision-making and competitiveness. Even with a divided Congress, we remain hopeful about opportunities to advance policies that support small business growth and encourage the creation of new enterprises. Congress must also provide a check on costly and harmful regulatory initiatives that are being pursued by the various federal regulatory agencies, which SBE Council will strongly support.

Following three years of uncertainty and volatility, entrepreneurs and small business owners crave stability. Given instability across the world and within the economy, smart pro-business policy will help to invigorate small business outlook and confidence. SBE Council will advocate for policies that:

● Provide tax relief and promote simplicity.

● Deliver regulatory relief and certainty, rather than costly new burdens and red tape. Small businesses need regulatory system modernization.

● Promote more affordable choices in health insurance, access to health care, and life-saving drugs and treatments.

● Allow entrepreneurs and small business owners to continue to operate independently.

● Encourage strong innovation and private sector investment, which will help the economy continue to emerge from supply chain challenges and sustain U.S. global economic and innovative leadership.

● Improve capital formation and access.

● Enable our small businesses to more effectively compete with larger players and in the global marketplace through friendly business policies at home, and access to markets abroad.

● Maintain open, affordable, and seamless access to online consumer marketplaces and digital tools provided by platforms. Encourage the next phase of the internet and connectivity of immersive technologies.

● Protect and strengthen intellectual property (IP) rights and protections.

● Curb the effects of inflation and high prices by pulling back on excessive government spending, not imposing new tax and regulatory costs on business, encouraging energy development in the U.S., and sound monetary policy.

● Spend infrastructure dollars intelligently and fairly through transparency, inclusive and open competition, allowing all competent businesses to compete for government contracts, and ensure tax dollars are spent where most needed to improve infrastructure and broadband access.

Tax Fairness, Relief and Simplicity

Tax increases on businesses, investors, capital, entrepreneurs and workers hurt the economy, investment, and undermine competitiveness. Lowering taxes and simplifying the tax code will support U.S. and small business competitiveness. Among other issues, SBE Council supports:

● Making permanent key provisions in the Tax Cuts and Jobs Act (JCTA) that expire after 2025, including: the 20% deduction on business income (Section 199A), lower individual tax rates, an increase in the estate and gift tax exemption, bonus depreciation improvements, and various other provisions that would impact a small to mid-size firm’s ability to hold onto their capital and reinvest in their business.

● Lowering the corporate tax rate.

● Permanent relief from the new 1099-K Form expanded reporting requirement, which was delayed to January 2024.

● Oversight of $45.6 billion in new taxpayer resources allocated to the IRS for enforcement (vs. only $3 billion for taxpayer services), as audits are disproportionately conducted on self-employed small businesses of moderate means.

● SBE Council will oppose efforts that increase taxes on small businesses and entrepreneurs, including efforts to impose a wealth tax, increase individual rates, increase capital gains taxes, repeal stepped-up basis, and measures that eat away at the value of exemption thresholds provided for the death tax.

Regulatory Fairness, Relief and Modernization

The federal regulatory process is seriously outdated. Reforming the complex and difficult-to-navigate federal system is long overdue. Accountability, transparency and responsiveness are needed, especially for small businesses. The current regulatory system, under the Biden Administration, seems gamed to align with the pre-determined biases of regulators. Entrepreneurs and small business owners need a meaningful voice in the regulatory process and regulators need to understand the impact of their proposals. With respect to regulation and regulatory process issues, SBE Council will support:

● Modernization and Improvement of the Regulatory Flexibility Act. More protection for small businesses is needed within the costly and complex regulatory system. SBE Council supports reforms and policies that provide small businesses with a meaningful voice, more opportunity for engagement across federal agencies, cost-benefit analysis on the direct and indirect impact of regulation, and a better process that reviews and look-backs at how proposed or existing regulations specifically impact the small business sector.

There are a host of bills that SBE Council will look to advance and support (which have been introduced in previous congressional sessions) to improve accountability and ensure U.S. businesses are not unduly harmed or competitively disadvantaged by the cumulative cost of regulation.

● Protecting Entrepreneurial Opportunity. We will continue to push back against regulatory proposals that undermine new business creation and the formation of independent businesses, along with wealth-building opportunities for entrepreneurs. For example, SBE Council will continue to strongly oppose Department of Labor overreach on new rules governing independent contractors, expansion of the joint employer rule, and the costly overtime regulation.

● Protecting the Startup Ecosystem.  Federal Trade Commission (FTC) activity and overreach are harming America’s startup ecosystem. Our M&A system has worked extraordinarily well, but is now under attack via the Chairman’s jarring departure from the consumer harm standard and an unprecedented and novel philosophy of trying to predict future tech innovations and market concentration. This undermines investment, innovation, and ironically competition.

● A Common-Sense Privacy Framework. SBE Council supports the development of one set of national privacy rules that preempt state laws and treat all players fairly and uniformly. As the states move on their own set of rules, SBE Council is urging lawmakers and the Administration to consider the costly impact and unworkability of a 50-state reporting regime for small businesses. The growth of the digital economy and innovation across platforms and sectors offer all businesses, particularly small businesses, extraordinary opportunities.  A consistent set of privacy and data security rules is not only important for small business growth, it is critical for consumer confidence in utilizing digital platforms and devices.

Capital Formation and Access to Capital

Startup and growth capital is an enduring challenge for entrepreneurs and small business owners. SBE Council will work to advance positive tax, regulatory, and lending reform initiatives that promote capital formation and access, and oppose efforts that work to restrain investment, capital formation and availability, and increase the cost of capital.

● The Next JOBS Act. In previous sessions of Congress, there was broad bipartisan support for a package of House bills (JOBS Act 3.0 in 2018, for example, that passed 406-4), which SBE Council strongly supported but did not receive a vote in the Senate. JOBS Act 4.0 was introduced in the last Congress and was not a priority due to COVID-19 related matters. SBE Council will push for an updated and similar package to address an array of regulatory barriers and costs – from launching a firm to exit – which will also include needed reforms and updates to investment crowdfunding.

● SEC Regulation and Activity. Current leadership at the Securities and Exchange Commission (SEC) seems more concerned with producing complex new regulations (that would have the effect of driving capital out of the U.S.) rather than helping to improve the efficiency and competitiveness of U.S. capital markets. Creating costly new regulatory regimes for “ESG disclosures,” the Private Fund Advisers Rule, and rolling back sound changes to rules (like the 2020 Proxy Advisor Rule) are creating uncertainties and new costs within U.S. capital markets. SEC Chairman Gary Gensler’s agenda has been called “unprecedented.”  Of equal concern is that the commission is restricting public participation by limiting the amount of time that organizations and the private sector can review and comment on regulatory proposals and changes. Gunking up America’s financial system and the flow of capital with loads of new rules and barriers has a downstream impact on entrepreneurs and small businesses. As such, SBE Council will continue to weigh in with rules, encourage oversight via Congress, and urge small business voices within the SEC to speak up and become more engaged in the regulatory process.

Promoting the Digital Ecosystem and Development of Immersive Technologies

SBE Council’s small business and startup surveys over the past 3 years have consistently demonstrated the importance of digital tools and platforms for new and existing businesses. There is no question about it – without the innovative technology and connectivity of entrepreneurs to platforms, the pandemic could have been cataclysmic for our small businesses and the U.S. economy. But even prior to the pandemic, entrepreneurs and small businesses were increasingly tapping into digital tools and platforms to reach new customers, operate more efficiently, and to innovate. The pandemic accelerated digitization and the adoption of digital tools. These tools and new innovations remain critical to small businesses in their efforts to meet the needs and demands of the ever-changing marketplace, and to solve problems for consumers and employees. To encourage the development of new technologies, and the next phase of the internet and connected immersive Web 3 technology, SBE Council:

● Supports the return of light-touch policies that have encouraged private-sector investment and American leadership in tech innovation.

● Will continue to voice concern about misguided “anti-trust” legislation – which is really intrusive regulation. These efforts are aimed at U.S. technology leaders, but the effect of these legislative efforts such as the “American Innovation and Choice Online Act” will have unintended consequences for entrepreneurs and small businesses that use tech platforms and digital tools, and for the many creators and innovators whose livelihoods depend on the vibrancy and growth of tech platforms. Moreover, important and efficient tools – such as targeted advertising for small businesses – has lowered costs, boosted sales, and improved ROI for countless small businesses. Efforts to eliminate this effective strategy for small businesses will be harmful to their bottom lines, and undermine competition and vibrancy in the economy.

● Support policies that promote the development and deployment of immersive technologies and their connectivity. The next generation of connectivity and technology promises to ignite extraordinary innovation, opportunity and business models that bring valuable benefits and solutions to consumers while further democratizing access to institutions, resources, experiences and the broader economy. The U.S. must continue to lead in developing the internet’s next phase – that is, the metaverse – and pro-investment, pro-innovation tax and regulatory policies are critical to that end.

Securing Broadband Access for Non-served and Underserved Communities

A dynamic, inclusive economy depends on quality broadband access. Whether it’s the next generation of wireless tech, or providing rural communities with broadband access for the first time, SBE Council strongly believes that access to the digital economy is essential for every American to pursue opportunity and their dreams. Areas of focus for 2023 include:

● Access to mid-band spectrum and sound spectrum policy. U.S. networks are supporting more data traffic today than from 2010 to 2017 combined! Access to mid-band spectrum is not only necessary to keep up with growing demand, but it is also necessary for bringing the full promise of 5G and immersive technologies to entrepreneurs, their workers and local communities. SBE Council supports freeing up additional mid-band spectrum in order to deploy broadband and 5G technology, and reauthorizing the Federal Communication Commission’s (FCC’s) spectrum auction authority.

● Monitoring the implementation of the bipartisan infrastructure package to ensure effective use and smart spending to close the digital divide. The Broadband Equity, Access, and Development (BEAD) and Digital Equity Planning Grant programs with the bipartisan infrastructure package represent a critical opportunity to greatly narrow the digital divide and help small businesses and economic development in digitally-barren areas of our nation. SBE Council encourages congressional oversight to ensure these taxpayer dollars are allocated efficiently and with great care to ensure digital connectivity is maximized through these programs.

● Pushing back on regulatory initiatives that undermine broadband connectivity. Some regulatory initiatives sound noble – like “preventing digital discrimination” – but could have the opposite effect and exacerbate barriers to broadband investment and deployment. That could be the case with regulatory initiatives being explored and/or pursued by the Federal Communications Commission (FCC), which SBE Council will continue to weigh in on in 2023.

● Supporting the extension of the Affordability Connectivity Program. The program’s funds will be depleted in the not-to-distant future.

PART II of the 2023 Policy Agenda for Entrepreneurs and Small Businesses will be added SOON, including:

● Fortifying and Recommitting to Intellectual Property (IP) Rights and Protections

● Broadening Access to Markets and U.S. Leadership through Trade

● Access to Affordable Choices in Health Coverage

● Boosting U.S. Energy Production and Innovation

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