Shawn Lewis worries that a year that could bring increases in health care expenses, sales tax costs and property tax rates in California for small business owners could come to spell doom.
“All three of those issues are pretty much at the top of any list of concerns for small business owners,” Lewis, policy director of the National Federation of Independent Business (NFIB), a national advocacy group that bills itself as the “voice of small business,” told the Northern California Record. “Any one of them creates a significant sense of uncertainty in business and financial planning all by themselves.”
In California, 2019 is expected to bring the debate over single-payer health care, a sales tax on services and a split roll property tax to center stage, all of the with all of the issues thought to be to the detriment of the “small ma and pa, independent business” owners NFIB seeks to cater to.
NFIB estimates that such a change in health care coverage alone could come with an annual pricetag of as much as $400 billion, while small business owners and consumers could also be on the hook for at least another $100 billion stemming from a sales tax on services.
A split roll property tax could also force small business owners to dig deeper into their pockets by removing Proposition 13 property tax protections from commercial properties in the name of aligning current assessments with market value, almost certainly increasing expenditures of those who own or rent commercial property as many small business owners regularly do.
“This all boils down to an issue of survival for members, where they often will either go out of business or can’t continue to have any chance of being solvent,” Lewis added. “This isn’t a talking point, but the issues real people are being forced to calculate and consider. I saw a recent national survey that pegged averaged profits at about $65,000 per year for small business owners. How much more new taxes can you place on that?”
In its 75-years of existence, Lewis said annual surveys have shown rising health care costs to always be the most pressing issue for most members with the prospect of single-payer only raising the stakes all the more.
“Members are very concerned with a plan like single-payer and its one-size fits all approach, especially when funding for it stands to come through significant tax increases,” Lewis added. “Quite frankly, single-payer is not a solution from the perspective of all our members.”
As for an added sales tax, Lewis said anytime there’s talk of such big ideas you have to concern yourself with how they stand to be paid for.
“These kinds of sales tax would disproportionately increase costs on small business owners because they don’t have the revenue to have in-house services they way many large companies do,” he said. “It’s a tax almost solely on them because small business owners are much more reliant on contracting services than many of the larger companies.”
With the split-roll tax, Lewis again reasoned that small business owners would be among those most impacted because they are the ones most apt to be renting or leasing commercial properties.
“All three issues raise an element of uncertainty for our constituency,” Lewis added. “Again, we simply don’t have the luxury of an endless revenue stream.”
All the ambivalence figures to zap at least some of the exuberance recently exuded by small business owners in a 2018 NFIB Small Business Optimism Index, which found many owners have been uplifted by a bubbling economy, recent tax and regulatory relief and even a renewed ability to be able to reinvest in their businesses.