America, Kentucky Suffocating Small Business Owners
We received the following email today, inspired, we think, by President Obama's speech to the Joint Session of Congress last night. This small business owner is concerned that the President is unfamiliar with just how hard is is to operate a business and deal with the incredible amount of fees and inessential requirements placed on entrepreneurs by the government.
Dear Mr. President,
I am a small business owner from KY. Our family company has grown significantly over the last 12 years from very few employees and little sales to approximately 2,500 employees in 5 states (we own various hospitality-related franchises), as well as commercial real estate. Next year we expect to do roughly $100 million in sales.
Would you be willing to give me a few minutes of your time (either on the phone or in person) to discuss some unintended consequences of the Stimulus bill as well as how many of our modern day state and federal laws hurt or deter small businesses, their employees and, ultimately, the consumer?
As much as you know, which I'm certain is more than me, I bet I can still shock you with the real effects of some of current US state and federal legislation. For example, the recent Stimulus bill penalizes companies that offered health insurance benefits to their employees versus no penalty to companies that did not offer health insurance benefits. I would appreciate the opportunity to discuss this with you.
Also, we pay 150% to 200% - probably more actually - over our net income in various taxes (payroll, property, other, impact fees, income tax, etc.). If the taxes we directly generate are included (sales & wholesale taxes, etc.) then we pay upwards of 400% in taxes versus what we actually make. I willingly offer to show this to you on our P&L. It is truly disheartening and takes the air out of my lungs. There is so much more I need to show you, just not enough room to write it all.
When the State of KY passed the Alternative Minimum Tax (it has since been repealed b/c of public outrage) it actually penalized companies providing a better value to its guests since it taxed sales generated versus its profits. Thus, businesses doing more sales (because of popularity over lower prices than their competitors and receiving less profit margin actually paid more in taxes than businesses overcharging guests in favor of a higher profit margin.
Please give me the opportunity to explain how one state's Recycling Act is one of worst pieces of legislation ever passed in the history of this country (businesses are mandated to use and pay certain haulers thousands of dollars per location per year and, the result when we investigated was that b/c of the dramatic increase in recycling material, the haulers were just dumping it in the regular landfills). Now a recycling compliance form is required in order to receive your annual liquor license renewal.
I was just informed today that the State of TN nearly tripled its unemployment tax on business irrespective of the employers employment record or retention rate. Thus, they're trying to pump up their depleted unemployment benefits fund by penalizing employers thus leading to more unemployment thus leading to a bigger unemployment fund deficit. Obviously that will warrant another 300% unemployment tax increase. I also just found out today that a building inspector in one town in TN will not give us our our Certificate of Occupancy (we open in 3 days to the public) unless we pay a "road impact fee" of $26,032.90. I thought that is what the high local business taxes were for in TN. Last year we had to pay over $100,000 in one Tennessee city just for the right to tap into the water. One might say it was a day of surprises but really it was just business as usual.
It's tiring watching many large, international corporations strangle our state for huge tax breaks and incentives while small businesses continue to fall through the cracks. After all, small businesses make up a majority of the employment base and retail dollars in the US. When the cookie jar is empty, these internationals again auction off their headquarters or plants (relocate) to the highest bidder with the promise of bringing thousands of new jobs. I don't blame them one bit. Truthfully, they shouldn't have to bribe state governments for special incentives that should be available to all businesses.
Why not incentivize all employers with a dollar for dollar tax deduction on equity invested in new buildings, infrastructure, and anything else that creates jobs? Depreciation schedules aren't cutting the cake. Let's reward companies that actually boost total tax revenue, not just the ones that talk a good game.
Mr. President, I believe that if you understand the monumental hurdles facing small and medium size businesses such as ours, you can lead us not only into a long-lasting recovery but continuing prosperity. All I want to do is effectively run our organization.
I cannot remember the last time I was able to focus on the simple things that made our small company great, like focusing on our people, food, service and value. Unfortunately over the last several years our officers and myself have spent all of our time appeasing confusing legislative and administrative agency requirements and lobbying against proposed bills and amendments detrimental to business, employees, customers, and citizens of this great nation.
I have so much more to tell you. Please give me the opportunity. I would greatly appreciate any time you are able to give me, and I believe, so would the American people.
An Overtaxed Small Business Owner
We'll let you know if he hears anything.
