Small Business Feeling Squeezed

Sep 7, 2010

More small business stories, this time from the Washington Post:

Last year, even as he struggled through the worst of the recession, Chris Upham said revenue at his District-based real estate and construction businesses doubled -- allowing him to hire two agents. But Upham said he hasn't increased his staff thus far in 2010 and he doesn't expect to for the remainder of the year. That's because his taxes rose sevenfold. And he said he anticipates they'll increase again if the Bush tax cuts for people earning $250,000 and above expire at the end of the year. As small businesses try to plot their recovery, attention is turning to what many owners consider burdensome policies -- higher taxes, new accounting procedures and health-care mandates. Even as the government tries to help with an array of small-business initiatives, many owners say the intervention is as much a hindrance to hiring as the faltering economy.

...In all, the administration has implemented about a dozen small-business programs, including a health-care tax credit; more opportunities for women business owners to receive government contracts; and cuts in capital gains taxes...But Brian Bethune, chief U.S. financial economist at IHS Global Insight, asserts that the initiatives coupled with numerous other new regulations are making owners feel overburdened, overregulated and less secure about the economy. They may see it as more interference," Bethune said, "they see it as bureaucratic intrusion."

Some business owners and advocates complain that some of the programs contradict one another. Stephanie Cathcart, spokeswoman for the National Federation of Independent Business, said benefits from the payroll tax exemption business owners use when they hire unemployed people are mitigated by provisions in the health-care overhaul law that reduce a tax credit when businesses hire. "It's counterintuitive," she said. "Frankly, a lot of these initiatives fall short."

...Dinesh Sharma, president of government contracting firm Washington Business Group in Chantilly, said he ruled out using the payroll tax exemption, believing the savings couldn't justify the tens of thousands of dollars he'd spend in salary and health insurance for a new employee. "We're not large enough to hire someone just to take the benefit of a small tax break," he added. "The burden is more than the benefit."

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