You’re the Boss Blog: Do Small-Business Owners Feel Overtaxed and Overregulated? A Survey Says No

The Agenda

How small-business issues are shaping politics and policy.

Among many small-business advocates, it has become an article of faith that “uncertainty” about new regulations and higher taxes is frustrating the ambitions of small-business owners.

A “massive federal regulatory nightmare,” is how the head of the National Federation of Independent Business, Dan Danner, puts it on the organization’s Web site, one that “stifles innovation, grinds small businesses down and prohibits job creation.” And Republicans in the House have used these concerns to wage an aggressive campaign against federal regulations sanctioned by existing law as well as any proposal to raise taxes in order to reduce the deficit. But it turns out that these concerns are not shared by as many actual small-business owners as you might expect.

That, at any rate, is one finding of a recent poll released by the Hartford Financial Group. According to a summary of the survey, when small-business owners were asked to name the single biggest barrier to success, only 9 percent cited government rules and regulations. Just 2 percent cited “too many taxes or uncertainty related to taxes.” (The Washington Post reported recently that economists say regulation has little impact on job creation over all.)

Interestingly, the myth of the overregulated and overtaxed small business has such a strong hold over the public imagination that the survey’s authors appear to believe it themselves, despite their own findings. How else to explain this paragraph in a press release from the Hartford Financial Group:

Small businesses are also challenged by government regulations, which result in greater administrative and accounting burdens. According to the study, small business owners identify economic constraints, such as government rules, regulations and taxes, as the single biggest factor holding them back (37 percent). And, they say that uncertainty about how public policy could potentially stunt the future growth of business is hindering their ability to plan ahead.

It turns out that this 37 percent also includes people who cited other factors beyond taxes and regulation, including a lack of paying customers and unspecified complaints about the economy. In fact, regulations and taxes were the two smallest of the four factors constituting the 37 percent, while lack of paying customers and those unspecified complaints were cited by 26 percent of all responders.

A spokeswoman for Hartford, Deborah Pont, confirmed the figures but insisted that the press release did not exaggerate concern about regulations and taxes. “Concerns about economic constraints — including regulatory challenges, taxes and the broader economy — were a recurring theme expressed throughout the study, both qualitatively and quantitatively,” she wrote in an e-mailed statement.

In any event, the poll had other interesting findings. For one, most small-business owners apparently do not cast their votes based solely on their companies’ interests. Just 24 percent of small-business owners said their business was their “primary concern” in the voting booth, while 31 percent said that their company had no impact on how they voted. Forty-four percent, meanwhile, said that in some cases, policies that directly affect their business could also affect their vote.

The survey, which mostly concerns itself with how small-business owners view success, divides respondents by their ambitions — whether they wish to expand their businesses or merely maintain them. This has become an important distinction in the last few years, as more economists, like Jared Bernstein, pin their hopes for economic growth on so-called gazelles, and are sometimes dismissive of slower-growing businesses.

The survey found that owners were nearly evenly divided between growers (52 percent) and maintainers (48 percent). And apart from how much money they hope to make, there are not huge differences in their views on defining success or the obstacles to achieving it. Except for this: maintainers are noticeably more likely to complain about government regulations than growth-oriented entrepreneurs. And the growth-oriented — whom many economists and policy makers now believe are crucial to creating new jobs — find it much harder to obtain capital. Fully a quarter of growing companies report that it is extremely difficult to get a loan, slightly more than say it is easy to obtain financing. By contrast; 41 percent of maintenance businesses say it is easy to get a loan, while only 11 percent find it extremely difficult.

The poll also looked at minority small-business owners, and here again the results are striking. For one thing, they are far more ambitious than business owners as a whole: 65 percent said they were growth-oriented. And while at first blush that might imply a strong desire for personal gain, a closer look at the results suggest they are more interested in the welfare of their communities than the survey population at large. Eighty-three percent of minority respondents said paying high enough wages for employees to live comfortably is important to success, compared with 72 percent of all respondents. And only 30 percent of minority owners ranked making enough money to maintain their own lifestyle as the first or second most important factor defining success, compared with 42 percent among the broader group.

The survey interviewed, by telephone, 2,000 owners of companies with fewer than 100 employees but more than $100,000 in annual revenue. The companies had been operating for at least a year. They were randomly selected from a list maintained by Dun Bradstreet. The margin of error on the national sample is 3 percent.

Article source: http://feeds.nytimes.com/click.phdo?i=149abc416e728155605e67a6128a5eac