Small business advocates give a thumbs-up to President Barack Obama for highlighting entrepreneurship in his State of the Union address this week, but they note that most of the presidents business references catered more to big business than to small-business owners.
The small-business advocates give the president especially high marks for saying he would immediately correct a flaw in the newly enacted health-care law that has resulted in a bookkeeping burden for small businesses. It was a reference to the provision in the law that requires businesses to report to the IRS, using Tax Form 1099, every vendor payment valued at $600 or more.
President Obama addressed concerns of the small business community at large, said Ben Jones, chairman of the National Minority Business Council Inc.s board of directors and president and CEO of Lightning Supply Inc., a Teaneck, N.J., supplier of industrial products. He did not specifically go out of his way to address the minority business community, although I think that he understands the plight of minority business in this country. What he did was talk about the small business community and what needs to be done to invigorate it.
At the National Small Business Association, officials point out that innovation and entrepreneurship permeated the presidents address.
Obamas comments underscored both the founding principle of innovation and entrepreneurship in the American dream as well as their importance to todays economy, said Larry Nannis, NSBA chair and a shareholder at Levine, Katz, Nannis & Solomon, P.C., a Boston accounting firm that provides financial management and tax advice to entrepreneurs and small businesses. Innovation is what we do. Small firms produce five times as many patents per revenue dollar as large companies and 20 times as many as universities. We applaud the presidents commitment to innovation.
?Nannis said the president covered two key concerns of NSBA members when he acknowledged the need to address regulatory burdens and the complex tax code. And while the presidents urging to reduce the corporate tax rate is a positive step, he said, it cannot be done in a vacuum.
Broad reform of the entire tax code is necessary, not just for corporate entities. The overwhelming majority of small businesses are pass-through entities and therefore pay business taxes through their individual income tax. Allowing the smallest businesses to pay a much higher tax on their business income than a multinational, multi-billion corporation undercuts any semblance of fairness, Nannis said.
Harry C. Alford, co-founder, president and CEO of the National Black Chamber of Commerce, it was appropriate for President Obama to focus on the big picture and on business in general.
I think the president must focus on macro economic issues, the big picture and the big corporations. Talking about taxation is the big corporations. He mentioned free trade and he mentioned tax reduction, which is good for businesses in general. When you mention free trade and less taxes, I get ready to call you a business man, Mr. President, Alford said.
He added, What we wanted, though, was a home run from him and he gave us a double.
?The harshest response to date comes from the National Federation of Independent Businesses.
Overall our impression is that, when the Obama administration talks about business they really mean big business. Increasing trade and cutting corporate taxes are big-business issues. Very few small firms engage in international trade or pay corporate taxes; they generally file as individuals and benefit more from breaks on individual tax rates, said Dan Danner, the organizations president and CEO. With no mention of the job-creating power of small businesses, and no proposals to unleash their enormous potential, the small-business community is left with the feeling that the president doesnt get small business.
Danner concedes, however, that there were hopeful moments for small-business owners in the presidents speech. We do appreciate the presidents mention of repeal the health-care laws 1099 provision. It is something that is a terrible burden on small firms and never should have been in the law to begin with, he said.