Conservatives like to harp on how high corporate taxes and excessive regulations are killing small businesses, and the best way to create jobs is to cut taxes. But as an owner of several small businesses, I’ve always known that was a lie.
It is absolutely silly to think that businesses hire employees when their taxes are cut. Businesses hire employees when demand for their products or services go up, and they need additional employees to meet this demand. When a company’s profits go up (whether from lowered taxes or other reasons) they pass those profits on in the form of bonuses and dividends, as we have seen over and over again, not by hiring new employees.
So it is no surprise that a survey of random small business owners across the nation found the same thing. None of the business owners complained about regulation in their particular industries, and most seemed to welcome it.
As one owner put it: “Government regulations are not ‘choking’ our business, the hospitality business. In order to do business in today’s environment, government regulations are necessary and we must deal with them. The health and safety of our guests depend on regulations. It is the government regulations that help keep things in order.”
Some even pointed to the lack of regulation in mortgage lending as precipitating the financial crisis in 2007.
As for taxes, one owner said “I think the rich have to be taxed, sorry.” Many support closing corporate loopholes that would cause their tax bite to go up.
So if it isn’t taxes and regulations, what is hurting small businesses? According to the owner of four small businesses “What is choking my business is insurance. What’s choking all business is insurance. You cannot go into business, any business — small business or large business — unless you can afford insurance.”