Small Business Owners: Subsidies Worse than Taxes
|February 20, 2014||Posted by Staff under Subsidies & Waste & Public Debt, Taxes|
This 2013 excerpt of Clawback, Feb 17, is by Greg LeRoy.
A large national poll of independent business owners finds that cutting taxpayer subsidies to big business is their top-rated public policy priority. And a smaller survey of high-growth entrepreneurs finds that the last things they are concerned about are low taxes or business-friendly regulations.
Nationwide, of 2,602 small business owners said the public policy change that would most help their business was “eliminate subsidies for big companies.”
Of the fastest-growing companies in the United States, only five percent cited low taxes and only two percent cited regulations as a reason for choosing their location. Before starting their company, they moved to a city of one million or more because of personal connections and quality of life. Their most critical business reason for staying was a pool of talented labor, followed by access to customers and suppliers.
Ed. Notes: In the US, regulations are not as big a problem as in the nations listed by deSoto in his work on capitalism where people must wait years for permits. That said, even if most businesses here don’t run into trouble, some still do, and none should.
Instead of regulate and permit (or not) and otherwise interfere, governments could instead get out of the limited liability business. To minimize liability and ruinous lawsuits, business would conduct its affairs safely and buy sufficient insurance coverage.
And to attract talented labor, customers, and suppliers, there is something any town can do to make itself such a destination city. It’s something cities across the Pacific used to help themselves become the Asian Tigers. And that is, shift the property tax off buildings, onto locations. Then to pay the higher “land dues”, the owners quit speculating and develop their sites. The development stimulates the local economy and the second wave of businesses that fill the new structures keep the good growth going.
This property tax shift does not directly fall on new businesses but it does create a context that favors start-ups. Indeed, in the recession before last, the Australian towns that taxed land not only did not lose businesses but actually added them! Good ol’ geonomics worked again!
So smart taxes and efficient land use matter, as does eliminating the financial favors for bigger insiders.