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Small Business: The Key to Economic Growth

Innovation Promotes Economic Growth

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Washington, April 27, 2017 | comments

WASHINGTON – Ahead of National Small Business Week, a distinguished group of experts told the House Small Business Committee Subcommittee on Economic Growth, Tax, and Capital Access that small business innovation can spur economic growth.

“Washington can do more to help America’s businesses with the largest growth potential— small businesses. They represent 48 percent of the workers in the private sector, and make up an overwhelming amount of all businesses,” said Subcommittee Chairman Brat (R-VA).“With next week being National Small Business Week, today’s hearing is a timely opportunity to discuss the connection between small businesses and economic growth.”

“And while small business owners painstakingly finished their tax returns last week, simplifying and lowering tax burdens would be a huge shot in the arm to both small businesses and economic growth. Access to capital is yet another issue small businesses need addressed in order to ensure their success,” Subcommittee Chairman Brat added. “While Congress and the Administration are committed to reviewing regulation that inhibits access to capital, the Subcommittee is also concerned about the fact that venture capital investment is largely concentrated in only a few metropolitan areas.”

The Way Forward

“I believe that the hope of human achievement, and policies that allow for us to produce and grow free of government intervention will break all expert predictions,” said Stephen Moore, Distinguished Fellow for the Project for Economic Growth at The Heritage Foundation. “This is all possible as Congress enacts policies that reduce regulation, lower taxes, and empower small business to expand beyond what we thought possible.” Moore continued, “No other debt-reduction policy –certainly not a tax increase—comes close to having the fiscal effect that sustained prosperity does.”

“If you reduce the tax on working, you’re going to get more work,” Moore said.

Raising Capital

“Turning to present day trends, 2017 has seen a widespread but tempered increase in confidence among small business owners regarding the economy and overall trends in business investment,” testified Andrew Sherman, Partner at Seyfarth Shaw LLP. “Business owner optimism has increased in part due to promises of tax reform, regulatory reform, and the strength of the capital markets. We are all aware that small and emerging businesses are the backbone of our country and a significant engine for the creation of new jobs.

“Streamlining agencies’ approval processes at the state and federal level, while still maintaining comprehensive business guidelines, will help businesses open their doors faster and with lower ongoing compliance costs,” added Sherman. “The current trend to better define the true cost of regulation and its impact on smaller companies, as well as pressure on agencies to publish clearer regulations so that small businesses can understand guidelines, rules and regulations without having to involve lawyers, accountants and other business counselors must continue to be the focus of this Committee.”

Cutting Red Tape and Taxes for Small Business

“If you think about what policies would be a good idea, you would have to think about what policies would spur productivity growth. Regulatory reform could be something useful,” said Dr. Robert Barro, a John H. Makin Visiting Scholar with the American Enterprise Institute. “An attractive fiscal package could spur economic growth, and here I would look at things like the proposed cuts in corporate income taxes and income tax rates as being positive.”

“We have very high business tax rates – virtually the highest in the world,” Barro testified.

You can read full testimony from today’s hearing HERE and view full video HERE.

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