Today, successful business owners are often portrayed as greedy, but we often forget the money and time that was invested to make success possible. For many, their savings, and even their homes, are often on the line should they fail. They are often the last to be paid. There are no scheduled hours or holidays for the owner. For most owners, it takes a 24/7 preoccupation to nurse their small businesses through the ups and downs from birth to financial well being. Only 70% of new small businesses are still functioning after two years; only half survive five years. While the number of unincorporated self-employed has remained steady in 2009, the number of larger, incorporated self-employed has dropped by half a million since 2008. Unfortunately, it's those larger, successful firms that hire the most employees.
It's also clear that the surviving, successful small business owners will be some of the citizens hit hardest by President Obama's proposed tax increases. Bill Rys, tax counsel for the National Federation of Independent Business, reports that about 10% of small business owners make more than $250,000, but 30% of those with 20 to 250 employees exceed that level of taxable income. The recent recession has most certainly decreased the income of many small business owners, but those owners facing higher taxes are the very people we want to hire more workers, not cut back on their businesses.
These same small business owners are not only facing higher taxes and continuing economic uncertainty; they see future costs coming out of Washington, which include cap and trade restrictions, expanded healthcare obligations and increased regulations. Regulations and government mandates hit small business hardest. According to the Small Business Administration, it costs firms with 20 or fewer employees 45% more per employee to comply with federal regulations. It's clear that President Obama "cares" about financial giants "too big to fail" and companies like GM and Chrysler with lucrative labor union contracts. But where's the support for the small businesses? Ninety-eight percent of small businesses, America's primary job growth engine, are getting no stimulus money.
Instead, they get added costs and taxes.
Although the credit picture has improved, getting loans to fund capital investment remains difficult for small businesses. While government borrowing has exploded to unprecedented levels, corporate borrowing has dropped 50% and 80% for non-corporate small business borrowers. Forty percent of small business owners say that they can't get loans. Minority-owned businesses have been hit hardest.
President Bush's tax breaks for all tax-paying Americans helped America bounce back from the economic downturn in 2000 and after 9/11. Admittedly, his unwise spending and failure to push a reluctant Congress to regulate and reign in the mortgage excesses at Fannie Mae and Freddie Mac contributed to our recession. But Obama's plan to raise taxes on the one segment of the population that provides the capital investment and job growth needed for a robust recovery is unwise and short-sighted. Today, it's time we honor rather than take advantage of these inspiring men and women whose businesses serve us all.