Regulations and taxes not seen as job killers
Post on: 2011-09-05 By: admin
WASHINGTON - Politicians and business groups often blame excessive regulation and fear of higher taxes for tepid hiring in the economy. However, little evidence of that emerged when McClatchy Newspapers canvassed a random sample of small-business owners across the nation.
"Government regulations are not 'choking' our business, the hospitality business," said Bernard Wolfson, the president of Hospitality Operations in Miami. "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."
The U.S. Chamber of Commerce is among the most vocal critics of the Obama administration, blaming excessive regulation and the administration's overhaul of health care laws for creating an environment of uncertainty that's hampering job creation.
When it's asked what specific regulations harm small businesses - which account for about 65 percent of U.S. jobs - the Chamber of Commerce points to health care, banking and national labor. Yet all these issues weigh much more heavily on big corporations than on small business.
McClatchy reached out to owners of small businesses, many of them mom-and-pop operations, to find out whether they indeed were being choked by regulation, whether uncertainty over taxes affected their hiring plans and whether the health care overhaul was helping or hurting their Advertisementbusiness.
Their response was surprising.
None of the business owners complained about regulation in their particular industries, and most seemed to welcome it. Some pointed to the lack of regulation in mortgage lending as a principal cause of the financial crisis that brought about the Great Recession of 2007-09 and its grim aftermath.
Wolfson's firm is readying to open a Hampton Inn this year in Miami on land purchased from a condo developer during the housing downturn. His business could be in line for higher taxes if President Barack Obama allows the current lower rates on the richest Americans to expire in 2012 and return to previous levels.
That didn't seem to bother Wolfson, who through his partnership declares profit and loss as a pass-through on his personal income taxes, as many small businesses do.
"Higher taxes are not good for business, but some of the loopholes and deductions should be looked at," he said.
The answer from Rick Douglas, the owner of Minit Maids, a cleaning service with 17 employees in Charlotte, N.C., was more blunt."I think the rich have to be taxed. Sorry," Douglas said. He added that he isn't facing a sea of new regulations but that he does struggle with an old issue, workers' compensation claims.
Douglas said that he's hired more workers this year, citing pent-up demand from customers.
"My theory is that the people that do have jobs are working harder and they have less time to clean," he said.
Then there's Rip Daniels. He owns four businesses in Gulfport, Miss., including real estate ventures, a radio station and a boutique hotel-bistro. He said his problem isn't regulation.
"Absolutely, positively not. 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," he told Biloxi's Sun Herald.
"Who wants to pay more? I certainly don't. I want to pay my fair share, and I do," Daniels said, adding that he wouldn't resist loophole closures as a way for the federal government to cut deficits.
For many small businesses, their chief problem is an old one: navigating the bureaucracy of the Small Business Administration to secure government-backed loans.
"My biggest problem is the current status of the banking system and how it's being over-regulated," said Dennis Sweeney, a co-owner of Summit Sportswear Inc. "I want to grow this business, and I'm using the same credit line that I've been using for five years."
Kansas City-based Summit, 20 years old, supplies college-licensed clothing to university bookstores in four Midwestern states. The small local banks Summit deals with frown on the red tape required for SBA loans. A loan he got in 2008 took three months of nightmarish documentation.
"It was only $35,000," Sweeney said. "Our bank basically said it would never do that again."
Other small firms say their problem is simply a lack of customers.
Barry Grant, the regional president of Meritage Homes Corp., in California, said, "It starts with jobs....There's an awful lot of people sitting on the fence; they're waiting for a sign."
Sometimes a small business' struggle has nothing to do with government at all.
Lynn Swager, a co-owner of Brass on Ivory in Edgewater, Md., sells, rents and repairs musical instruments. She faces a completely different sort of challenge.
"The thing that chokes us, believe it or not, is the Internet. There are so many things that are accessible on the Internet that they can purchase for less than I can purchase from my distributor," Swager said. "Everybody thinks the Internet is this great thing that is happening to the world, but it is really, I think, killing a lot of small business. People that we talk to that are no longer in business say the same thing exactly."Print
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