Risky Business

As of last night, the tax burden on small businesses has become one of the central (if not THE central) issues of the 2008 presidential campaign.

In a year when wars both foreign (Iraq and Afghanistan) and cultural (latte-sipping media elites versus hockey moms) dominated the headlines, how did this happen?

Strangely enough, we can thank one man: Joe Wurzelbacher of Ohio, or as he is better known, "Joe the Plumber." His feelings about Obama's tax plan were basically the centerpiece of last night's debate.

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The year that everyone seems to be thinking about is 1929. There are constant reports that we are witnessing a financial collapse unparalleled since that year and that drastic action is needed to prevent a second Great Depression.

But when it comes to small businesses, we don't need to go back to 1929. Is the economic downturn hurting them even as badly as recessions did in recent decades? I quoted National Federation of Independent Business chief economist William Dunkelberg in an article the other week where he argued that credit problems are not nearly as bad now as they were in the recession in the early '80s, for example.

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Tuesday's presidential debate has everyone talking about healthcare reform. But that's an issue that has been on the mind of small-business owners for some time. I just recently interviewed Thomas Sullivan, the outgoing chief counsel for advocacy at the Small Business Administration, for a Q&A that should be up next week. He told me that, during his tenure at the SBA, the one constant has been that the soaring cost of healthcare is the No. 1 problem cited by small-business owners.

One "solution" to rising healthcare costs is to have more things like smoking bans and regulations on fatty foods in an attempt to force people to lead healthier lives. The rub is that when people live longer, new healthcare costs pop up because there's more demand for care in old age.

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Here are two questions that I would love to see aimed at the presidential candidates when they debate tonight in Nashville.

For Barack Obama:
Senator Obama, you insist that 95 percent of Americans would receive a tax cut under your plan and that only the fabulously wealthy would see a greater tax burden. But your tax “cuts” for lower- and middle-class Americans come in the form of tax credits that expire as a family moves up the income ladder, resulting in, some researchers have shown, significantly higher marginal tax rates for some families. If we really want to encourage people to start businesses, shouldn't we make the tax code simpler and easier to plan around, rather than stuffing in more exemptions that could cause a potential entrepreneur to wonder if boosting his or her income is worth it?

For John McCain:
Senator McCain, you actually sounded like a maverick when you told a crowd in Michigan that lost auto jobs “aren't coming back” and that Michigan workers should develop new skills for a new economy. But, having voiced support for $25 billion in loans for the Detroit auto industry, your actions seem to express the opposite sentiment: that we should hold on to the old economy for dear life. How can Michigan develop a new economy if large, failing companies are receiving a bailout from the government that small entrepreneurs could never hope to receive because they don't have the same political clout?

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