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Policy Matters: Policy Does Matter, You Know
a weekly column Have you ever stopped to wonder why I called this column Policy Matters? It's not really rocket science. I'm sure you're already several steps ahead of me. For starters, the column (like the entire MicroEnterprise Journal) is about matters of public policy for the most part. As often as not, even our reviews of the economy or the latest small business research have policy implications. Besides that, there is the much more important notion that public policy does matter. It matters to you and everything about your microbusiness: how your business needs to operate, what its obligations are in terms of taxes and regulations, how much it costs to run your business, and more.
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This week's news briefs
Bipartisan Tax Reform Proposal Is Mixed Bag
One of the big surprises contained in the research released last month by the Microbusiness Research Institute (MRI) was the microbusiness take on taxes. For years, small business lobbying organizations stoutly asserted that the nation's small business owners wanted lower tax rates. They do, too, but the MRI research found that more of them want simpler taxes and still more of them want fairer taxes. That being the case, microbusiness owners are likely to cheer the efforts of Senators Ron Wyden (D-OR) and Judd Gregg (R-NH) to enact tax reform this year. Their aim is exactly that — fairer and simpler taxes — and they might pull it off, if they can get the attention of their fellow Senators this session. Will their proposal work for microbusinesses as billed? As is usually the case with these big ticket reform items, the devil is in the details.
The Bipartisan Tax Fairness and Simplification Act of 2010 (S. 3018) reduces the number of both individual and corporate tax brackets and reduces everybody's tax rates. It gets rid of the alternative minimum tax and almost triples the standard deduction so that people don't have to itemize. Wyden and Gregg also eliminate preferential tax treatment for specific business types, industries and activities, and reduce the number of exclusions, exemptions, deductions, and credits. Of course, to say that the proposal "targets corporate welfare" doesn't tell you much. If the legislation instructs the Congressional Budget Office to use the Cato Institute's recommendations we're in trouble, because the Cato Institute thinks the SBA is "corporate welfare." Still, this bill is a good, bipartisan place to start a much-needed discussion about tax reform, although it's doubtful that the Senate Finance Committee will get to it during the current session of Congress.
SBA Issues New Rule For Women's Contracting Program
It looks like the SBA is finally going to implement that Women's Federal Procurement Program that so many women's groups were fighting about with the Bush Administration for eight long years. It all started back in 2000 when President Bill Clinton signed the Equity in Contracting for Women Act, which called for the SBA to conduct a study to ascertain the industry sectors in which women-owned businesses were chronically and historically underrepresented among federal contract awardees. The agency would then create a set of rules under which procurement agents could set aside certain contracts for women-owned businesses in those relevant industries. That doesn't sound so hard, does it?
You wouldn't believe the contortions the Bush Administration went through to avoid implementing the program but, with a new Administration comes new policy priorities — including some new ideas about obeying the law. Last week, the SBA announced a new set of proposed rules to implement the program, across the entire federal government in 83 industries, instead of just four (as the original SBA proposed rules did). The rule also removes the requirement that federal agencies certify their own past discrimination against women-owned firms in order for the program to apply and allows women business owners to self-certify that theirs is a (minimally) 51% woman-owned business (with adequate documentation, of course) in order to be eligible for contracts under the program, instead of insisting on third-party certification. The proposed rule is currently subject to public comment until close of business on May 3, 2010. To submit comments, visit www.regulations.gov.
Advocacy Releases Timely Jobs Report
Given all the yelling about ‘jobs, jobs, jobs,' the SBA Office of Advocacy released a particularly timely report last week, aptly entitled An Analysis of Small Business and Jobs. The paper, authored by Advocacy economist Brian Headd, bills itself as a primer to help policy makers (and anyone else who happens to be interested) "understand some basic facts and trends in small business employment ... ." Always assuming that any of them or their staff will actually read it. And they should. It's good stuff and should help to quiet some of those small business detractors who maintain that small firms don't create as many net new jobs as they are credited with. This report looks at 15 years' worth of both static and dynamic data from sources in both the Census Bureau (Statistics of U.S. Businesses) and the Bureau of Labor Statistics (Business Employment Dynamics).
By using both data sets, Headd is able to examine the impact of small employers on the labor market in both static and dynamic contexts, which yields a solid set of facts. The static data shows the small business share of employment: roughly half the private sector workforce. Meanwhile, the dynamic data illustrates the small business role in job creation -- although that role changes, depending on the question you ask. For example, when performing an analysis of job creation by firm age, the data shows that a cohort of firms, tracked from birth, create more jobs at startup than they do at any other time during the following 20 years. On the other hand, a review of quarterly dynamic employment data finds that continuing firms account for more than two-thirds (69%) of net new job creation, while firm births and deaths only net the remaining 31%. And, during the period from 1992 through the middle of last year, gains or losses of 20 or more employees in a relatively small number of firms accounts for 57% of net employment change.
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