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Policy Matters: Sit. Stay.
a weekly column People are interesting creatures. When you train them to respond to certain stimuli in certain ways, they really do just stop thinking with anything approaching either intelligence or logic. Case in point: the public option. Opponents to the Kennedy-Dodd health care proposal are whipping up as much hysteria as they can about the public option and certain segments of the public are responding as trained. 'We don't want the government dictating which doctors we are and are not allowed to see!'
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This week's news briefs
Micros Say No Mandates, Frown On Public Option
As lawmakers debate various elements of a health care reform bill, two thirds of microbusiness owners say they are watching closely, with about 60% feeling they have, minimally, a moderate understanding of the issues, according to a survey released last week by the National Association for the Self-Employed (NASE). The survey was conducted among microbusiness owners as defined by the NASE: firms with fewer than ten employees. Among the demographic information provided about survey respondents, the distribution of nonemployer and employer firm size classes was not provided.
Microbusiness owners are much more concerned about cost containment than they are about either access or choice, by a 3-to-2 margin. Among a pretty comprehensive list of market reform proposals, microbusiness owner respondents registered the most support for Association Health Plans (88.7% support, 63% strongly support) and for a health insurance marketplace or exchange (80.9% support, 55% strongly support). The one market reform proposal that did not win favor with the majority of microbusiness owners was, unsurprisingly, the public option. Just over half of them oppose a government run health insurance program for those unable to otherwise access health insurance, and almost 40% strongly oppose it. Another issue that microbusiness owners seem to feel somewhat strongly about is insurance mandates. In fact, 55% of them frown upon the basic individual mandate and 52.2% give the thumbs down to employer mandates for all full-time employees. Opposition softens somewhat when the pill is sweetened with tax breaks and it softens even more when a small business exemption is added to the mix.
Mo-Better Home Office Deduction Bill Introduced
The Home Office Tax Deduction Simplification and Improvement Act of 2009 was introduced last week in the House (H.R. 3056) by my old friend Charlie Gonzalez (D-TX), and in the Senate (S. 1349) by Senators Kent Conrad (D-ND) and Olympia Snowe (R-ME). In both chambers of Congress, the legislation has been referred to their respective tax-writing committees. According to the press statement jointly released by the three lawmakers, this new legislation has a few additional goodies tacked onto it in addition to the standard home office deduction, which should further simplify things for home-based microbusiness owners.
For example, there is a provision in the bill allowing taxpayers to be eligible for the deduction if they use a part of their home to meet with or deal with clients, regardless of whether said clients are physically present or not. The bill also allows for de minimus use of business space for personal activities, so that home-based business owners don't have to barricade their children out of their office or feel that paying a bill online from a business computer will disqualify them from taking the deduction. In some ways, the press statement is actually more interesting than the legislation, thanks to the way everybody went on and on about small firms and job creation. Love rhetoric, except that the vast majority of home-based microbusinesses are nonemployers. One assumes the snow job is necessary to garner support, given the current economic climate. What this bill will do is to provide those home-based businesses with capital to reinvest in their businesses, something they need pretty badly since they lack access to traditional capital and something that will help the economy, too.
Nonemployers Return To Strong Growth In 2007
After a single year of tepid growth in 2006, the population of U.S. firms without paid employees other than the business owner(s) came roaring back in 2007 with almost a million new firms, according to data released by the Census Bureau last week. Overall, nonemployer firms increased in number by almost 940,000, or 4.5% in 2007. Total receipts still have not cracked $1 trillion but they have edged closer, clocking in at $992 billion. That is a 2.2% increase over the $971 billion in receipts earned by nonemployers in 2006. That said, average annual revenues for nonemployer firms were down by 2.2% on a year-over-year basis, falling from $46,724 to $45,688. The discrepancy between the gains in nonemployer population and losses in receipts is fairly widespread, impacting half of industry sectors at the two-digit NAICS code level.
This new spike in nonemployer numbers was almost as unexpected as last year's slowdown. The common belief was that the nonemployer population would stabilize at 2-3% for a year or two, and that we would not see a recessionary spike in nonemployer numbers until the 2009 data was released in a couple of years. And that may still turn out to be true. It may be that the 2007 numbers are the precursor to a real spike of between 6% and 10%, that may show up in the 2008 or 2009 nonemployer data. On the other hand, it also pays to remember that small firms had been shedding jobs for quite some time before job losses began showing up in the government's monthly employment data. In fact, what we have seen among nonemployers in 2007 may have been brought about by the small firm layoffs and closures that took place in 2006. By the time the dust settles (sometime in 2010, I suspect), it will be interesting to see how many nonemployer firms there are in the country and what percentage of all U.S. firms they will comprise. We'll be able to get started on that when the SBA Office of Advocacy updates its firm size data early next year.
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