My bad, I suggested KNS cut the column to a letter with ill intent (a commenter on KNS said "good letter" which confused me, since I read online). My apologies.
For those interested- the full text of what I submitted is below. The boldface text is the missing part, which I thought was a critical argument. However it was 1000 words, over the columns 700-word hard limit.
Again, my deepest apologies that I did not see via online web version that it WAS a column, not a letter. I owe somebody lunch or a few beers.
Every day in the office, as I return from lunch, my ritual is to go through the day’s incoming mail. Last week, I got a pleasant surprise- a check from our insurance company based on the Medical Loss Ratio (MLR), as dictated in the Affordable Care Act, also known inaccurately as “ObamaCare.” Simply put, it is a refund of overpayment of premiums for our health plan. Based on the company / employee share, we get to split the refund or use it to reduce premiums for this year. The Affordable Care Act also coincided with annual health insurance rate hikes dropping from 15% to 25% per year to far more reasonable inflationary increases. This has, so far, been nothing but good news for my small company. However, some in Congress want to “help small business” by repealing the Act.
As one of the many venerated and worshipped small business owners (aka “Job Creators”), I see many members of Congress keep using me to bolster their respective arguments. How accurate are their claims?
Obamacare? First, I’d have to say it is an inaccurate term. It should be called “Congresscare”, since it was Congress who wrote the bill. The final bill has little resemblance to Obama’s vision for health care reform. But I digress. Like roughly 90% of small businesses in the US, our company is less than 50 employees and thus exempt from the requirements of the Affordable Care Act, a fact that seems to elude many people. Since our company hires highly educated professionals and must remain competitive in our hiring, we already offer health care, and the Act will eventually give us additional options for shopping for plans through the state exchanges. We are looking forward to the exchanges opening in 2014) and increasing competition.
Tax policy seems to be another issue that causes politicians to wave the flag for small business owners. The most common argument is the issue of tax rates for those earning (e.g., final profits, not gross revenues) over $250,000 or even $500,000 a year, with the argument that higher tax rates “kills jobs.” As a small business owner, this argument is flawed in an obvious way: The salary I pay when I create a job is a deductible expense. Lowering tax rates provides an incentive for me NOT to create a job and hire a new employee, since it means I will be able to personally keep more of the profits. If you raised my incremental tax rate to, say, 80% instead, then there’s a very strong incentive for me to hire employees and deduct their salaries from my highly-taxed profits, since I would be able to keep less of those profits. The logic coming from most members of Congress is completely backwards.
What creates jobs? I hire based on the demand for my products and services, not tax rates. If you want to create jobs, put money in the hands of consumers, primarily the middle class. If someone in the top 1% makes a 1000 times the salary of the average worker, do they buy 1000 cars? Do they buy 1000 houses? Do they consume $300,000 a month in groceries? No. Wealth polarization is actually contradictory to the goal of job creation, so tax policy that increases polarization is the true ‘job killer.’
Want to create more jobs here in the U.S.? Increase the tax breaks for those who hire here in the U.S., and remove the historical salary caps from such incentives, so high-tech jobs are equally encouraged by the tax credits. Penalize companies that ship jobs overseas. Change state, local, and federal procurement policies to encourage purchases from local and US-based companies. Several of the states I work with already offer local companies a slight preference in bid evaluations. Why shouldn’t we do this nationally?
Regulation are another common political punching bag. Do regulations kills jobs and harm small business? Perhaps, but some regulations also create jobs. Who performs the inspections? Who provides the tools for safety or environmental compliance? Many companies are built based on this type of work, and East Tennessee is the home to many of them. In fact, environmental cleanups and air pollution control technologies are one of the sectors where the U.S. excels, and provides a strong opportunity for exports. This expertise was built here in the U.S. in response to the Clean Air Act and the USEPA.
If I could point to one regulation that actually harmed my business, it was the brain-dead Tennessee Lawful Employment act passed by the Tennessee Legislature last year that requires me to use the E-Verify system to make sure that none of my employees are illegal immigrants. Never mind that I have worked with most of them for 20 years. No, the state decided that I needed to spend about 20 hours figuring out how to use an obtuse web site, simply because a few state legislators wanted to bash immigrants for political points.
I brought up the issue of this tedious regulation with my new state senator, Becky Massey, who said one of her priorities would be to reduce regulations affecting small businesses. I expressed how this burden, multiplied by the number of small businesses in Tennessee, probably cost 300 jobs statewide. I let her know I was happy to travel to Nashville to testify on hearings she wanted to hold on reducing burdensome regulations on small business. However, I have yet to hear back from her on this issue. I’m sure the Legislature has other ideas of what constitutes burdensome regulation, but if they refuse to listen to actual small business owners, it would appear to be nothing but crony capitalism or political hyperbole.
So, the next time a state legislator or member of Congress waxes poetically about how they are doing this or that for small business- ask them when the last time they actually spoke to a real small business owner they didn’t know through political connections – or political contributions. Odds are they have no clue how their legislative proposal will truly affect the real small business owner that doesn’t routinely lobby legislative bodies for favors.
Steve Drevik is the President and owner of Agilaire, which provides systems for air quality monitoring throughout the US and overseas. Since its start in 2006, it has grown from 4 employees to 9 permanent employees with health and dental benefits.
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