This isn’t a plea for more Payroll Protection Program money but it is a plea on how to meaningfully help small businesses.
Best of all, it isn’t complicated or expensive, which means no one in government will get it or embrace it. But that’s OK. We have to keep showing them the way.
Here are my seven points to prosperity to help the mom and pops out there. (Why not 10 points? Because I don’t need 10. Less is more.)
- Reduce fuel prices. This is the top of the list. Gas prices are up 70 to 80 cents a gallon where I live since the election. People are already complaining about it. Decisions have been made at the federal level that have led to increasing gas prices.
If we aren’t careful, this is going to be 2010 all over again where commodities are very expensive, which crushes middle and lower class people as fuel prices and food prices soar. (Grain prices are up also). America is a large nation with a robust interstate system and we are designed to move goods up and down those roads cheaply. When America doesn’t have cheap energy, it struggles.
- State and local governments need to open up, which will provide the kind of stimulus we once took for granted. As people are vaccinated against Covid-19 and the case numbers go down, states are starting to open up. That’s good because the very best stimulus program is allowing the world’s greatest economy to be open. No amount of federal money printing can replicate an open U.S. economy.
- The federal government should not pay extended unemployment benefits. This is a disincentive to work. If someone can collect state unemployment benefits in the $600-a-week range and then dip into federal unemployment in the range of $300 a week, that person may not aggressively seek work. As businesses fully reopen, they are going to need employees. We want people motivated to apply for those jobs. Small business owners are talking about this extended federal benefit and shaking their heads.
The old unemployment system worked just fine for decades. Why do we suddenly need more and bigger unemployment benefits?
Help small businesses – cut taxes
- In Texas, eliminate the franchise tax for businesses under 75 employees that did not make a profit in 2020. Do this retroactively for 2020 and into 2021. The franchise tax is based on a business’s gross revenue, which means the tax has to be paid whether or not a profit is earned. It’s a terrible tax and actually, it should be repealed forever.
- A payroll tax holiday for new hires. Payroll taxes are like the franchise tax. They are paid whether or not a business makes a profit. Also, a business has to staff someone to collect these taxes and give them to the correct government bodies.
Why is this? Why should a small business devote many hours a year to collect taxes for the government for free? I don’t want to go down a rabbit hole on this issue but we all just assume it’s OK for our bookkeepers to collect taxes and not get paid for it.
I would like to see no payroll taxes paid by an employer who makes a new hire in 2021. That would be a nice incentive to hire and it would expire at the end of the year.
You would have small businesses talking about this big time and you want them feeling confident about hiring.
- Freeze property taxes for the next two years for commercial property. This will help businesses know their costs (which reduces uncertainty) and won’t have that much impact on local government, which has not had to close or cut costs like business has.
- Freeze federal income taxes. Keep the current tax rates in place for the next three years. This applies to capital gains rates also. Again, we are trying to get rid of uncertainty, which kills innovation.
There it is. Seven points to a better economy. It’s all easy to do and will work, which is also the bad news for my plan.
I believe politicians want to appropriate funds, point to those funds, and say, “Look what I gave to small business.”
Actually, not much was given. The funds were too hard to access or simply weren’t needed. We had a photo op and a sound bite and everyone moved on.
Meanwhile mom and pop still need help.