Small Businesses Can Handle Taxes; Need is Stability

November 26, 2012 at 2:50 pm 3 comments

Below is an Opinion piece from The Support Center’s President/CEO Lenwood V. Long, Sr. from today’s Greensboro News & Record:

We’re hearing a lot about the “fiscal cliff” and the consequences of allowing the tax cuts for the wealthiest Americans to expire. Small businesses have been thrown into the ring, with claims in the media that they will be dealt a detrimental blow if the tax cuts expire. But those of us who work with small businesses every day know that the vast majority of small businesses will not be harmed at all, and that taxes are not among the top concerns of small businesses.

Instead, what we need are policies to support a strong and growing middle class, which can create demand for the goods and services that our small businesses provide. This, in addition to expanding access to capital, is what drives business expansion and job creation.

Most small businesses do not report their income as personal income — and of those that do, only a small number will be impacted by higher tax rates on income over $250,000. According to the Center on Budget and Policy Priorities, only 1.4 percent of small businesses would be affected if these changes took effect. 

Extending these tax cuts on the rich will only benefit the very wealthy — not the restaurants, bakeries, corner stores, salons and other mom-and-pop shops that we work with on a daily basis. The truth is that these are the economic engines and job creators in communities across the country, particularly in the underserved communities we work in. Over the past 20 years, small firms have accounted for 60 to 70 percent of job creation in the U.S. 

A survey by the Main Street Alliance found that, by far, small businesses are concerned about weak consumer demand. We work with small businesses in underserved communities, and our borrowers echo this concern. With persistent high unemployment — particularly in the many rural, under-resourced communities across the state — many families continue to face financial and economic hardships, which means that they cannot participate fully in their local economies. 

The policies and programs that support working families will not only help improve their quality of life, but also help to support the small businesses in their communities.

Investments in our working families are investments in the long-term health of our economy. The Congressional Budget Office and Moody’s Analytics have shown that safety-net programs that help lift people out of poverty are a much more efficient use of our resources. But with the looming fiscal cliff, the future of these programs is uncertain. 

The $109 billion cuts in 2013 alone mean significant and devastating cuts to job training, workforce development, education and child care programs, among others. These are the programs that support families and help create healthy communities. Without healthy communities, small businesses would not be able to succeed.

Most of the claims about the dangerous impacts of the expiration of the tax cuts on small businesses do not resonate with the reality on Main Street. If they expire, everyone — including small businesses — will continue to receive tax cuts on their incomes below $250,000. 

We should focus on putting policies in place that uplift those who continue to struggle with economic hardships, and those communities that remain underserved and are in need of economic development.

Small businesses are an important part of these communities. When their fellow citizens succeed and find financial and economic stability, so do they.

Lenwood V. Long is president and CEO of  The Support Center in Wake Forest.

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