Was 2003 a good year for small business? Well, when you look at key issues that impact the entrepreneurial sector of our economy, the answer generally is positive. In fact, following are the ‚Top 10 Plusses for Small Business in 2003’ and why:
1. Pro-Growth Tax Cuts. The tax cut passed in May was a huge positive for entrepreneurship and small business. Lower personal income tax rates gave a boost to the bottom line of most businesses, as 91 percent pay personal rather than corporate income taxes. Also, the reduction in the capital gains tax enhanced incentives for investing and risk taking. For good measure, expensing levels for small businesses were increased from $25,000 to $100,000, which provides added ability for firms to make capital investments in productive assets — from machinery and equipment to vehicles for hauling or transporting.
2. Faster Economic Growth. It was no mere coincidence that the economy began to pick up steam after the tax cuts were implemented. The economy growing at a more robust pace – at an 8.2% real rate in the third quarter — is good news for profits, and new and expanded business opportunities.
3. Job Creation on the Rise. The household employment survey — which is far more comprehensive, and better captures entrepreneurship and employment by startups and other small businesses than does the established employer survey — shows that just between September and November, employment rose by more than 1 million. From the most recent low in January 2002, 2.8 million jobs have been created. The 138.6 million employed in November 2003 ranked as an all-time high.
4. Health Savings Accounts (HSAs). The Medicare prescription drug bill included a provision that will make health coverage more affordable for small businesses. HSAs – formerly known as medical savings accounts (MSAs) – are now permanent, available to most consumers, and have been unshackled from unwarranted rules and restrictions. HSAs reduce health care expenses for employers, expand choice and control for consumers, and redress the problem of third-party payments that play such a big part in driving up health care costs.
5. Free Trade Accords. On September 3, President Bush signed free trade agreements with Chile and Singapore. Free and expanding international trade expands opportunities for small, dynamic U.S. businesses. After all, 97 percent of U.S. exporters are small businesses. As President Bush noted: ‚We support free trade in America because it is vital to the creation of jobs. It’s vital to the success of our economy. Exports accounted for roughly one quarter, one quarter of our economy’s growth in the 1990s.’
6. Repeal of Steel Tariffs. In early December, the Bush Administration wisely decided to reverse course and eliminate the steel tariffs it had imposed in March 2002. The higher tariffs had raised costs for small and medium-sized companies in the U.S. that use steel, and destroyed tens of thousands of jobs.
7. Robust Stock Market. The stock market has had a good year in 2003. Year to date as of December 16, the Dow Jones was up 21%, the Nasdaq had risen by 44%, and the S&P 500 had increased by 22%. That’s not only good news for the portfolios and pensions of small business owners and their employees, but it also signals optimism about the future of the economy and earnings.
8. Low Interest Rates. The cost of borrowing funds to build or expand is a major issue for small business. The prime rate fell to 4% in July 2003 and has remained there since. The last time the prime rate was this low was in April 1959.
9. Defeating Costly, Misguided Climate Measures. In 2003, some misguided climate measures were dealt defeats, which is a plus for everyone concerned about the costs of energy and economic growth. In Congress, an effort by Senators John McCain (R-AZ) and Joseph Lieberman (D-CT) to cap carbon-dioxide emissions from power plants went no where. Also, efforts in Congress to dramatically hike CAFE standards were rejected. In addition, Russia has recognized that trying to conform to the Kyoto Protocol on Climate Change would devastate that nation’s economy. While the climate science behind such initiatives is at best dubious, the economics is unmistakably bad, as energy costs would skyrocket and economic growth would slow.
10. Winning the War. Something that concerns all Americans, including small business owners and their employees, is that our nation is secure and protected. The toppling of Saddam Hussein’s evil regime in Iraq, his capture in December, and our pursuit of terrorists around the globe make the U.S. a safer place in which we can all pursue our dreams.