COMMENTARY | COLUMNISTS | JOHN KABATECK

The future of California’s small businesses

When it comes to California businesses, most people think of Silicon Valley giants such as Apple, eBay and Facebook. Yet for every multibillion-dollar corporation in our state there are countless small businesses, from restaurants and clothing stores to hair salons and furniture dealers. In fact, they make up 99.2 percent of all businesses in California.

For far too long, these small businesses have not received the type of support they deserve from our policymakers in Sacramento or Washington. This is troubling since, according to the U.S. Small Business Administration, small businesses make up 64 percent of all net new private-sector jobs.

Unlike many issues that arise in politics, fostering small business growth is something every American can and should support. This is because small business growth is a nonpartisan issue. There are small-business owners and employees from across the political spectrum. What unites these entrepreneurs and business leaders is the aspiration to build a successful enterprise, hire new employees and contribute positively to the local community.

From an advocacy standpoint, it’s important that small businesses in California are on the same page and have a voice in the political process. America is in the worst economic recovery in 30 years, while our national debt grows each day. Furthermore, California’s unemployment rate for May was 8.6 percent, well above the national average. This is unacceptable for a state with as much talent, creativity and innovative thinking as California.

As we all know, small businesses are the foundation of job creation in California and America. Each day the Legislature and Congress delay addressing the systemic problems in our government, America becomes more at risk for another economic downturn. For small businesses to thrive, and thereby California’s and America’s economy to grow, our elected officials must take seriously the need for job growth, a modernized regulatory system and fundamental tax reforms.

Today, America’s small business owners believe complying with federal regulations is the most significant problem confronting the success of their business. That is probably why 90 percent of small business owners support reforming the regulatory process.

But this should come as no big surprise. Last year, there were more than 283,000 full-time government employees dedicated to preparing and enforcing regulations, and in our state more than 102 agencies and departments promulgating upward of 467 regulations — all at different times throughout the year.

Fortunately, Gov. Jerry Brown signed the only regulatory reform bill to reach his desk, NFIB-sponsored SB 1099, which requires the state to implement regulations only four times a year — on designated quarterly dates — to give mom-and-pops some regulatory predictability.

But that’s simply not enough. To create a pro-growth business environment where small businesses can succeed, job creators, particularly small businesses, need smarter regulations. These reforms should include increased business input, greater openness and transparency, more thorough cost-benefit analysis, a lack of agency duplication, and regulations that are grounded in hard science and objective data. These important measures would improve our complex federal rulemaking process.

As many small business owners can tell you, California is the most heavily regulated state and is in desperate need of reform. That is why this year, NFIB/CA is supporting AB 1098 by Assemblywoman Sharon Quirk-Silva, which would require the state Office of Small Business Advocate to conduct a study every five years on the cost of state regulations on small business. Our government leaders need to see what their decisions are costing the economy.

Substantive tax reform is another major hurdle inside Washington, but it’s imperative that our tax system is simplified and that U.S. businesses receive tax relief. Anyone who has ever done their taxes can sympathize with America’s small business owners. Taxes are too high and are often too confusing.

Simple taxpayer inaccuracies could be greatly reduced by reforming the tax codes to make them easier to read and understand. Simplifying the tax code — rather than placing new burdens on small businesses — would go a long way toward creating taxpayer fairness and stronger small businesses.

In our current slow-growth economy, business owners need more flexibility, not more paperwork. America’s excessive regulations, complex tax code and high tax rates must come to an end if small businesses are to succeed and grow. It’s up to Congress to act. Now is their chance to free up small business capital that can be used to invest, expand and hire new workers in California and across the country.

Kabatek is executive director of the National Federation of Independent Businesses, California. Founded in 1943 as a nonprofit, nonpartisan organization, NFIB gives small- and independent-business owners a voice in shaping the public policy issues that affect their business.

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