As the President continues to call for well over $1 trillion in new taxes, including higher tax rates for small businesses, Main Street job creators have been speaking out about what those new taxes will mean for them and the men and women they work with each day. The news is not good. Three newly released surveys confirm the threat of higher tax rates is already hurting Main Street.
The monthly Small Business Economic Trends Report from the National Federation of Independent Business (NFIB) released yesterday reveals that small business confidence is at a near record low level. According to the survey, the net percent of small business owners that expect the economy to improve and business conditions to be better in the next six months fell 37 points from last month to a net negative 35 percent. As the chart below shows, this is the largest net percent change in at least 14 years and even worse than during the depths of the most recent recession.
Fifty-four percent of firms report the threat of tax hikes has already forced them to adjust their business plans. Of those firms:
- 67 percent report postponing hiring
- 65 percent report delaying or cancelling capital expenditures
- 32 percent report having already made layoffs
In the event that taxes rise, even more of the companies represented by the construction industry’s trade group will make changes to adapt to those increases. Nearly two-thirds of such firms that haven’t already acted report they will change their business plans next year. Of those:
- 62 percent will postpone or cancel capital expenditures
- 59 percent will delay hiring
- 31 percent will reduce the size of their workforce
The International Franchise Association’s annual Franchise Business Leader Survey echoes those concerns. Franchisees and franchisors alike believe that increasing current tax rates will have a negative impact on hiring and growth plans moving forward:
- 79 percent of franchisees report that an increase in tax rates will impact their ability to grow and expand their business
- 73 percent of franchisors report that an increase in tax rates will impact their ability to grow and expand their business
The message from Main Street, and nearly every credible study, is clear: higher tax rates mean fewer jobs. Rather than raise taxes on the backs of America’s entrepreneurs, now is the time for President Obama to come to the table with a serious and balanced plan that reduces spending and helps strengthen America’s fragile economy.