Government must step up to help small business
The federal government has spent billions of dollars to bail out big business and help insulate Wall Street from the impacts of the global economic slowdown that has accompanied the COVID-19 pandemic.
It is past time for elected officials at the state and particularly the national level to take steps to bolster small businesses to ensure they are able to survive until the uncertainty related to the pandemic is resolved.
Small business owners are used to taking big risks. They are used to riding the business cycle rollercoaster. They know to save when the economy is booming and make sacrifices to tread water when the economy slows down. They are resilient and proudly independent and would typically spurn the types of handouts and bailouts that have become commonplace for giant companies.
In normal times, the most small business owners want from the federal government is to be left alone and not be tied down by red tape and needless bureaucracies. These are far from normal times.
According to the Small Business Administration (SBA), more than 70% of U.S. small businesses shut down in March and remained closed for weeks or months. It is noteworthy that more than 60% of those closures were at the order of government and health offi cials and not by choice.
Small businesses have an outsized role in the overall economy. Businesses with fewer than 20 employees account for 89% of all businesses in the country. Small businesses also have an oversized impact when it comes to economic recovery with 64% of all new jobs in the country last year generated in small businesses.
Economic studies from previous pandemics over the past century offer signs of hope that national economic recovery will be swift, if the business infrastructure remains strong. America needs to invest in its small business infrastructure if it hopes to make a quick recovery and retain a global edge in the post-COVID-19 world.
Many small businesses across the country are hanging on by a thread, hoping things turn around. Stores, restaurants and entertainment venues are seeing fewer customers as people continue to avoid public places. Manufacturers and retail stores are facing supply chain disruptions making it difficult to provide the goods their customers desire.
America must take action now to ensure a strong economic base in the future. Congressional leaders and government agencies must work to develop focused stimulus programs that will provide relief for these businesses in the form of capital to keep their doors open and their employees earning paychecks.
To pay for these stimulus programs, the federal government should impose a national 1% sales tax on all online retail sales. According to the U.S. Department of Commerce, Americans spent $601.75 billion online with U.S. merchants in 2019, up $523.64 billion from the year before. Not only would this generate billions in additional tax revenue each year, but it would be a step toward helping to level the playing field between online companies and traditional brick and mortar businesses that form the backbone of America’s economy.
America will rebound quickly from the COVID-19 disruptions, provided leaders take the steps necessary to ensure small business infrastructure remains strong.