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Policy Matters
a weekly column
It Only Works When It's EasyI complain a lot, don't I? I spend a lot of my time looking at legislative proposals, largely for the purpose of pointing out how and why they are inadequate — at least, from a microbusiness perspective. Small business policy that is good for microbusinesses is a pretty rare thing and there's a reason for that. Small business policy that is good for microbusinesses is hard. During a Microbusiness Conversation last month, when the issue of sound public policy to help microbusinesses came up, here is how they described the essential policy challenge: "What do you need? And can somebody afford to give that sort of help and can somebody pay for it?"
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This week's news briefs
National Taxpayer Advocate Slams New 1099 Rules
National Taxpayer Advocate Nina Olsen has issued her annual report to Congress, in which she is required to describe for policy makers the taxpayers' major challenges for that particular fiscal year. Olsen adds her voice to the growing chorus of dismayed observers who express concern about the newly increased reporting requirements contained in the Patient Protection and Affordable Care Act. She also notes that the IRS needs to have its mission updated to include not only tax collection duties but also the administration of social programs that it is increasingly called upon to do, and that the agency should be funded accordingly. And she argues against some of the ways in which the IRS institutes collections actions against taxpayers, methods that unduly harm taxpayers, make it more difficult for them to resolve their tax issues, and do not appear to be particularly effective.
From the microbusiness perspective, those new reporting requirements are pretty daunting. I've heard them described before but never yet with the sort of detail Ms. Olsen uses to enumerate the many undesirable consequences in store. Every business filer will be required to file information returns, mostly IRS form 1099-MISC, for every vendor that provides them with more than $600 in goods or services. They will even have to file those forms for corporations. The National Taxpayer Advocates anticipates a mind-boggling regulatory burden for small businesses and, interestingly, an even more mind-boggling administrative burden for an underfunded IRS that will have to process all that paperwork. In addition, there remains serious doubt in many quarters about whether these new rules will increase voluntary tax compliance. More likely, the reverse will prove true as the rules get more complicated, more demanding and harder to decipher.
Does Anybody In Congress Know What Micros Need?
At a press conference held in Washington last week, Senate Committee on Small Business and Entrepreneurship Chairwoman Mary Landrieu (D-LA) took the podium to talk about what Congressional Democrats have done for small businesses and to plug their latest efforts in the current jobs bill that is, they say, being held up by Senate Republicans. Joining her for this spin-fest were Senate Majority Leader Harry Reid (D-NV), Senator Mark Warner (D-VA), SBA Administrator Karen Mills and Terry Gardiner of the left-leaning Small Business Majority.
The bill they were plugging is still more of the same, as lawmakers continue working on making debt capital available to small businesses, in addition to dishing up $12 billion in tax cuts and raising loan limits. At the press conference, Administrator Mills spoke of "giving small businesses the tools they need" to grow and lead the way to economic recovery. But do they really know what we need? Or are they even talking about us? Are loans and tax cuts all that is necessary for the small business sector to get cranking once again? Probably not -- at least, it hasn't worked so far. Certainly, loans and tax cuts might work nicely for larger small businesses but most microbusinesses (and certainly most nonemployers) probably aren't in the market for a loan right now. If policy makers want the vast microbusiness segment of the economy to contribute to recovery, they are going to have to think of something else to get us there.
Preliminary Business Survey Numbers Show Healthy Growth
Last week, the Census Bureau -- which seems to have been very busy lately -- released some preliminary estimates of business ownership numbers by gender and ethnicity, as well as by veteran status, from the 2007 Survey of Business Owners (SBO). The report, descriptively entitled Preliminary Estimates of Business Ownership by Gender, Ethnicity, Race and Veteran Status: 2007, is the first of ten releases over the next year to be culled from SBO data, culminating in the release of the Characteristics of Businesses and Characteristics of Business Owners reports in July 2011.
Among the highlights from these preliminary estimates, Census found that roughly 5.8 million of the nation's 27.1 million firms had paid employees. Receipts for employer firms totaled $29.2 trillion, an increase of 33.8% since 2002, while nonemployer receipts $972.7 billion, up 26.8% from 2002. Minority owned firms increased significantly in number, ranging from a 60.5% increase for black-owned firms to a 17.9% increase for American Indian-Alaska Native owned firms. The number of women-owned businesses grew by 20.1% between 2002 and 2007, as compared with an increase of 5.5% in the number of men-owned businesses over the same period. And receipts for minority owner firms and women owned firms were 55.6% and 27%, respectively, over the period.
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