Life so far under the Obama Administration has been anything but a picnic for the small business sector — including owner-operator truck drivers and family-owned tank truck carriers. All indications are it may only get worse for these operations.
Small businesses have been particularly hard hit by the deepening recession. For instance, more than 2,000 trucking companies — most of them smaller operations — shut down last year, and the trend is continuing unabated. Owner-operators have been hit every bit as hard as the small fleets.
President Obama's initial spending plan brought no relief at all for these small operators. Even the president's targeted small business stimulus offers only limited assistance. The focal point of the plan announced in mid March is to reduce small-business lending fees and increase the government guarantee on some Small Business Administration loans to 90%. That's not much help
Furthermore, Obama's so-called small business stimulus would be more than offset by his other programs. First, there is all that new debt that Obama dumped on the US economy during his first few months in office. As of now, the US national debt exceeds $10.7 trillion (the largest national debt in the world), and at least $2 trillion more will be added this year through the Obama Administration's spending programs. Much of the debt burden will fall on small businesses.
Debt payments, as well as additional funding for Obama social spending programs, will bring higher taxes. Obama said during his presidential campaign that multiple tax increases are planned for Americans earning more than $250,000 a year. What he failed to say was how punishing the tax increases could be for the small businesses that produce at least 60% of all jobs.
More than a third of small businesses (several hundred thousand) that file taxes as partnerships or S-Corporations have incomes in the range that Obama would target with tax increases on income, capital gains, and dividends. Most of the entrepreneurial income of the most successful small businesses would be taxed away under the plan in which the total federal tax rate would rise to 50%, including a higher marginal income tax rate, Medicare and Social Security taxes, and the phase out of exemptions from the Bush Administration.
Higher small business costs will come from Obama's proposed national health care plan — which would cost an estimated $1 trillion over 10 years. Carbon taxes on energy consumption and significantly higher fuel taxes also are waiting in the wings.
While higher taxes almost certainly will stifle small business creation and growth, the greatest damage to the sector could come from the card check program (Employee Free Choice Act), which a priority for the administration as a payoff for labor union support of Obama. If this legislation becomes law, it could cost at least 600,000 jobs and cause many small businesses to shut down.
The worst part of the card check program is that it would put an end to the democratic principle of a secret ballot in unionizing elections. Workers would have to vote publicly and could be vulnerable to aggressive intimidation tactics by union bosses. This is the electoral system that exists in China and North Korea.
Small businesses are the heart of the US economy. They are the source of entrepreneurship and the engine for job creation. The National Federation of Independent Business points out that small businesses represent 99% of all employer firms and employ about half of all private sector workers. These companies generated 60% to 80% of net new jobs annually over the last decade. They provide many of the goods and services that drive the US economy.
From the founding of the United States, small business has been a critical component in the success of this nation. Entrepreneurs and small businesses led the economic recovery in the last five recessions. A strong small business sector will be the driving force that puts the United States back on the road to real recovery from this recession.