newjerseynewsroom.com

BY ROHIT ARORA

COMMENTARY

This is not a good time for small business owners.

Consumer confidence fell in July for the second straight month. When consumer confidence is shaky, people tend to eat out less, forego buying new things, and find other ways to save their money. When consumers are worried about paying the bills, they cut their spending. Small businesses are the hardest hit when this occurs.

Since one of the reasons that entrepreneurs are not getting funding in this economy is the fact that their overall profits are down, the owners of startups and growing small companies will continue to find it difficult to raise capital.

The result is that innovation—the key engine to America's economic success—will be stunted.

Small business is a huge cog in the U.S. economic engine. The Small Business Administration (SBA) estimates that small businesses—companies that employ fewer than 500 workers—represent 99 percent of U.S. firms and account for more than half of the private-sector jobs in the country. Further, small businesses have generated almost two-thirds (roughly 64 percent) of the new jobs over the past decade.

When small businesses suffer, the economy suffers. It is as simple as that.

President Obama said that to address the budget deficit, it will take more than just government spending cuts. He seeks higher taxes on the "rich." Those whose taxes would go up include households making more than $250,000 per year. The millions of Americans who live in major metropolitan areas (New York/New Jersey, Boston, Chicago, LA, SF, etc.) can tell you that earning $250,000 in their sections of the country do not place them in the category of "rich."

Furthermore, the fortunate small business owners who are doing relatively well have worries that people employed by larger companies do not have. For instance, small business owners many times do not have 401K plans, and they certainly don't get "matching funds" from their employers. Entrepreneurs must rely on their own success for their retirement and their children's college educations. These innovators are not counting on pensions and social security checks for money in their golden years; they are counting on their own capabilities and success.

Lastly, there have been many stories in the media recently about the burden that state and local governments are placing on small business owners. Restaurateurs report facing a greater number of health department fines, delivery trucks are being issued parking tickets more quickly than ever, and owners of all types of businesses report that licenses and service fees are rising. Recently, Yolanda’s Restaurant in the Bronx, which has served its community and created local jobs for more than 50 years, received a bill for $600 from the Department of Environmental Protection because rainwater flowed from its building into city sewers. Government keeps squeezing small business owners. Nothing good comes of it.

Additionally, property tax increases inevitably trickle down to small businesses that don’t own their own buildings. All of these increases – as petty as they may be – are stifling entrepreneurs. Thus, the people who create jobs are the ones facing higher personal income taxes, payroll taxes and health care costs — all at the hands of the state. This is not wise policy.