Supporting Small Business is the Key to Strengthening the Middle Class
9/15/2014
By Rep. Seth Grove (R-York)
 
In the United States and Pennsylvania, the engine of our national economy is our small businesses that account for at least 60 percent of the jobs in America and 65 percent of jobs here in Pennsylvania. Last month, I had the pleasure of meeting with a number of small business owners in my district to discuss the many issues they face as they operate their businesses. As our conversation went on, it was clear these business owners, who help form the backbone of our local, state and national economy, had one message. This message was simple: the government -through taxes, regulations and mandates - was expanding their costs while stifling their opportunity to hire new workers and grow their businesses.
 
In order to address these concerns raised by our small business owners, Reps. Steve Bloom, George Dunbar and I introduced the small business tax fairness package. Too often in politics we hear “government is not concerned with the little guy.” However, the point of these bills is to provide our small businesses the same tax privileges as large companies. This includes allowing small businesses to write off losses in a year as a deduction on their taxes and exchange related capital without being taxed for the exchange.
 
In addition, I discussed with small business owners my proposal to lower the Personal Income Tax rate from 3.07 percent to 2.87 percent as most small businesses and all individuals file their taxes as personal income. History has shown the result of investing in our people and the private sector leads to economic growth. In particular we saw this in Pennsylvania as lowering the Capital Stock and Franchise Tax led to a loss of $600 million in revenue, but our Corporate Net Income Tax collection increased by $800 million. Additionally, Pennsylvania collected $2.3 billion more in Personal Income Taxes over the same time period as businesses expanded, created new jobs and hired more workers.
 
However, it is not enough to lower taxes as government mandates have expanded costs to the point companies are struggling. One business owner explained he made “higher gross profit but actually brought in less” money than he earned in previous years. Two such mandates being currently considered are raising the minimum wage and mandated paid leave. Raising the minimum wage causes concern as it forces companies to pay at least $10.10 an hour for work which makes it harder for companies to hire unskilled workers. Additionally, by increasing the cost of labor, companies are forced to reduce their costs, either by not hiring more workers or not expanding their operations.
 
Of greater concern to these small business owners was the prospect of government mandating the amount of paid leave their company grants employees. This concern is based over a twice- vetoed local ordinance in Philadelphia which would have required employers give up to 56 hours of paid sick leave to workers. Employers would have very little recourse prior to the employee using up their sick leave. One employer at the meeting expressed his frustration explaining the mandate, if enacted on him, could force him to shut down operations for the time the employee was out. The loss of productivity not only hurts the company, which is forced to hire more workers, but could threaten the jobs of the workers themselves.
 
The takeaway from my meeting with local small business owners is through investing in our small businesses, Pennsylvania can see our economy grow again. Investing in our small businesses is done in part by the state lowering their tax burden so they can expand and hire more workers.
 
Another form of investment is fighting off new and repealing erroneous mandates from government that dictate to entrepreneurs how to run their business. Whether mandating how much they pay their employee or mandating paid leave, the more intrusion by the government into business inevitably leads to increases in costs.
 
The role of government is to help create an environment for prosperity and economic growth. Unfortunately, too often, government gets in way of Pennsylvania’s job creators and make business difficult.
 
Representative Seth Grove
196th District
Pennsylvania House of Representatives

Media Contact: Nick Ruffner
717.260.6258
nruffner@pahousegop.com
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