Voting With Their Pocketbooks The 2000 election cycle brings some of small business' biggest issues to the forefront--from affordable health care to dot-com taxes.
(FORTUNE Magazine) – The nation's 25 million small business owners had better pay attention this presidential election year: The campaign features a raft of issues affecting their businesses' pocketbooks. Some, like the minimum wage, are perennials; others, like Internet taxes, are brand-new. Here's a scorecard to help follow the debates:
Hiking the minimum wage.
A higher minimum wage is so popular with voters that in March, 78 Republicans in the House of Representatives joined their Democrat colleagues to approve a $1 hike, which would raise the base wage to $6.15 per hour. House GOP leaders have tied the raise to their $123 billion tax-cut package, which President Clinton has vowed to veto. But with both parties so eager to score election-year points, expect a compromise.
What do small firms think of this? "It can really hurt cash strapped concerns," says John Emling, a lobbyist for the National Federation of Independent Business (NFIB) in Washington. "But if we have to swallow this bitter pill, we want some sugarcoating (such as the tax cut) to help it go down easier."
DEMOCRATS: YEA REPUBLICANS: YEA
Rolling back the death tax.
This 84-year-old tax requires estates to pay an assessment of 37% to 55% on the value of assets greater than $675,000 after the estate holder's demise. Family businesses decry the death tax as an abusive penalty, because the kids are suddenly hit with crippling tax bills that often force them to sell mom's or dad's legacy. Supporters? They say the tax helps close the gap between rich and poor. The GOP is mounting a three-pronged attack on the tax: The House tax-cut bill would slash the estate tax's floor rate to 18% and the ceiling to 50%. Representative Jennifer Dunn (R-Washington) is backing that up with a separate bill that would ease the tax by 5% a year until it reaches zero by 2010. And GOP Governor George W. Bush of Texas has vowed to kill the tax if elected President. Many Democrats agree with Vice President Al Gore that a repeal would be a sop to the rich. But others believe the benefits for small companies outweigh that concern--Representative John Tanner (D-Tennessee), for one, is co-sponsoring Dunn's bill, and there seem to be enough like-minded Democrats to fashion a compromise on the issue.
DEMOCRATS: NAY REPUBLICANS: YEA
Lowering health-care costs.
This is the No. 1 concern of small business owners. According to the NFIB, 60% of the 44.3 million Americans without health insurance are entrepreneurs, their families, and employees. One reason is the high cost of state-mandated insurance plans, which can require small firms to buy broad insurance policies with pricey offerings most entrepreneurs cannot afford. To help alleviate the problem, many small firms want to band together to form Association Health Plans (AHPs) with national bargaining power. A bill proposed by Representative James Talent (R-Missouri) would allow this and make small business exempt from mandates too. But AHPs have strong opposition from large insurers and Democrats, including Gore, who do not favor private-sector-type solutions for health-care problems. Republicans, though, see AHPs as a potent plank in their election-year health-care platform. Indeed, in his $42 billion health-care reform plan, the "New Prosperity Initiative" unveiled in April, Bush proposed that AHPs be offered to small business owners through trade associations.
DEMOCRATS: NAY REPUBLICANS: YEA
Taxing the Internet.
State officials fear that tax-free e-commerce will erode sales-tax receipts. Meanwhile, dot-coms and anti-tax partisans argue that sales taxes would stifle e-commerce. Small businesses don't know whom to support: Though reflexively anti-tax, many believe dot-coms are reaping an unfair price advantage from the tax-free Web. Both Gore and Bush favor extending the moratorium but stop there. How tough is this issue? A blue-ribbon panel in March voted 10-8 not to tax the Net. Their recommendation has been sent to Congress for review.
DEMOCRATS: ABSTAIN REPUBLICANS: ABSTAIN