May 4, 2017, Harrisburg, Pa.—"Jobs that pay" is one of Gov. Wolf’s three key priorities. But who creates these jobs? Not government. Small businesses provide 55 percent of all jobs and account for 66 percent of all net new jobs since the 1970s, according to the Small Business Administration.
But Gov. Wolf and lawmakers can create an environment that helps entrepreneurs start and build the small businesses that spur lasting economic growth. During National Small Business Week (April 30 – May 6) here are five ways state government can support small businesses growth:
1. Reverse the Industry-Killing Vape Tax: In 2016, Gov. Wolf and lawmakers imposed an onerous 40 percent wholesale tax on e-cigarette products. Almost a year later, nearly one-third of the state’s vape shops—about 100—have shut their doors as a result. Simply substituting a per-milliliter tax for the wholesale tax would likely reopen dozens of shops, creating hundreds of "jobs that pay." Legislation to accomplish this advanced in the State Senate last week.
2. Stop Subsidizing Big Business: Pennsylvania leads the nation in corporate welfare—doling out $6 billion since 2007, with poor economic growth to show for it. Taxing small businesses to grant favors to big businesses is a failed—and unfair—strategy. House lawmakers, including Majority Leader Dave Reed and Appropriations Chairman Stan Saylor, support reducing or eliminating corporate welfare, and the House budget includes a significant reduction in subsidies. The state Senate can build on the House’s work to foster a fair and free marketplace.
3. Reduce the Tax Burden: From the second-highest corporate tax rate in the world to the 15th-highest state and local tax burden in the country, Pennsylvania’s punitive tax climate discourages small businesses. By controlling spending and cutting waste, lawmakers can reduce taxes on all businesses, encouraging more job creation. A package of bills designed to lessen tax complexity is also advancing in the General Assembly. Lawmakers should act on these small-business friendly reforms.
4. Avoid Labor Mandates: Hiking the minimum wage to $12 per hour, as Gov. Wolf has proposed, will result in 53,700 lost jobs, according to the Independent Fiscal Office. Small businesses have already been hamstrung by the Affordable Care Act’s ban on reimbursing employee health insurance costs and are now facing efforts to mandate paid family leave. Instead of these one-size-fits-all, government mandates, Pennsylvania should allow employers the freedom to meet employees’ needs in ways that won’t cripple their businesses and cost jobs.
5. End the Government Liquor Monopoly: In 48 other states, the private sector handles wine and liquor sales in whole or in part. But in Pennsylvania, state government monopolizes this industry. Bills passed by the House last week could result in hundreds of new small businesses replacing state-run stores and better meeting consumer demands.
"Small businesses are the beating heart of Pennsylvania’s economy," Elizabeth Stelle, director of policy analysis for the Commonwealth Foundation, commented. "Entrepreneurs and innovators should be celebrated for succeeding despite the heavy tax and regulatory burden they face in the commonwealth. Rather than erecting barriers to small business owners’ success, government should be creating an environment where they can thrive.
Enacting these small business-friendly reforms will reverse the trend of Pennsylvanians leaving the state to find opportunity elsewhere."
# # #
The Commonwealth Foundation transforms free-market ideas into public policies so all Pennsylvanians can flourish.