Government, get out of the way of business
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This op-ed by Diane Hendricks, chairman of ABC Supply, ran in USA Today.
BELOIT, Wis. — Taxing job creators is a sure way to stop the engine of economic growth. We need to get out of the way of the small business owner — and big business owners — and allow them to do what government can only dream of doing: creating jobs and thereby creating wealth. We must lower the corporate tax rate, simplify the entire tax code, reduce the regulatory burden and resolve the uncertainty that surrounds recently passed and pending legislation.
You might have heard this before, but it actually works. Here in Beloit, I remember well how one company’s bankruptcy affected people’s lives. For more than 140 years, the Beloit Corp., then the world’s largest maker of paper-making machines, had been an anchor to the local economy. The family-owned business was acquired by a larger corporation that filed for bankruptcy in 1999. About 1,500 workers lost their jobs. The effect was felt everywhere as restaurants closed and parts-makers went under. A million square feet of industrial and office space lay vacant for two years.
My late husband, Ken, and I decided to buy the space and try to fill it with other businesses. We gave incentives, from low rents to build-outs, to a variety of businesses from around the country, urging them to come to Beloit. Today, 15 businesses operate in what used to be 800,000 square feet of vacant space, and 1,400 jobs were created.
It does work. Incentives produce jobs. The nation would be aghast if politicians tried to take away our right to vote and our right to worship as we wish. Yet politicians are taking away our economic rights and freedoms.
Our corporate income tax rate is the second-highest in the developed world. Our tax code — numbering more than 71,000 pages — baffles accountants and is destructively onerous. Our tangled web of state, local and federal regulations has hamstrung businesses; a recent study finds federal regulations alone cost businesses $1.75 trillion in 2008.
Too much uncertainty
Added to this, businesses face uncertainty about policy. We don’t know whether courts will find the new health care law constitutional or how regulators will implement new financial rules or whether Congress will tackle our deficits. We don’t even know whether, in a matter of weeks, taxes will spike or stay the same.
To the politicians these are policy questions; to the men and women who make this country run, they are real day-to-day problems that stand in the way of job creation and growth.
Governments have a role in this economy. They can provide things the private sector cannot, such as national defense and policing. They can also protect private property and arbitrate disputes. But government’s role is not stimulus. Federal and state folks must understand that business failure is a necessary part of the marketplace. But policymakers, along with the private sector, can figure out what conditions should be changed to reduce uncertainty. This would be a great place to start. I am not an economist, but I know a fixer-upper when I see one. The U.S. is a fixer-upper that can still be saved.
We need incentives instead of penalties. We need tax reform, not new taxes. We need to reduce uncertainty so that the private sector can provide jobs — the only proven way to increase purchasing power. In doing this, we allow employees to take their families out to movies, get washers and dryers, buy gas for the cars that take them to work and back home. That’s the way a revenue stream for the government is created, by creating more taxpayers — people with a J-O-B.
Diane M. Hendricks is chairman of ABC Supply, a national roofing, window and siding wholesale distributor based in Beloit, Wis.