To what extent is Washington harming small business?
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The Washington Post this morning has an interesting article exploring the effect of economic policy on small businesses. The piece concludes small businesses are overtaxed and overburdened by Washington.
In the last year-and-a-half, no less than a dozen programs have been created to help small businesses. Administrations past and present have focused their small business policy on loans and targeted tax credits with few results: there is too much uncertainty for small business owners to hire. Brian Bethune, chief U.S. financial economist at IHS Global Insight, says these programs, along with new regulations for things like health care and financial reform, have made entrepreneurs feel less secure about the economy. According to Bethune, “They may see it as more interference … they see it as bureaucratic intrusion.”
Chris Upham, owner of a real estate and construction business in Washington, DC, said higher taxes and more regulations have kept him from hiring new workers. He knows what he wants from Congress: “What I want government to do is not raise taxes — decrease them to allow us extra money for hiring.”
Upham’s real-world view stands counter to some in academia who are pushing Congress to raise taxes. Today in the Los Angeles Times an MIT professor suggests Congress raise the top income tax rates to pre-1980s levels (this means a top rate of 70 percent) to get the economy going again.
Lawmakers will return from recess next week and spend the remaining weeks of the legislative session considering new stimulus proposals (more on them here). Before they cast their votes, they should remember each decision they make will have consequences for all Americans, particularly small businesses.