Lost amidst the debate over tax reform — seemingly caught between the interests of individuals and those of large companies — are small businesses. It's a big oversight, because small business is a vital and often overlooked engine of economic growth.
According to the U.S. Small Business Administration, small businesses accounted for 63 percent of net new jobs between 2010 and 2016. They comprise 99.9 percent of all firms and employ 47.8 percent of all private sector workers.
Small businesses are also fragile, with only about half surviving at least five years. In order to succeed, they need all the help they can get.
Many institutions, including government, impact whether businesses grow and thrive. UBS recently surveyed a sample of business owners (with an average of 56 employees and $8 million in annual revenue), and respondents were clear about how Washington can help them and the larger economy: provide tax relief for businesses, and quickly.
The broader economic impact comes in the tangible changes owners would make if business taxes are lowered. Nearly half of small business owners said they would invest more in their businesses and almost one-third said they would hire more workers, pumping money into the economy and lowering the unemployment rate.
Small business owners are eager for action, and policymakers have a great opportunity to leverage their confidence in the near-term future. More than half (65 percent) of owners are optimistic about the economy's performance over the next year and the vast majority (77 percent) expect to grow their enterprises over the same time period.
Tax reform is the most popular path for Washington to help stimulate small business activity, but it's not the only one. Regulations are another major obstacle. Almost three-fourths of small business owners want less regulation, nearly half would invest more in their business if regulations were streamlined and one-third would hire more workers. Lifting regulations that are overly burdensome or unnecessary would free up business owners to generate even more economic activity.
Washington's actions in the coming weeks and months could have a big impact on whether the country's ongoing economic momentum continues or starts slipping. Comprehensive tax reform is a great place to start, and it will better allow small businesses to do what they do best – create jobs, fill gaps in the marketplace and strengthen their communities. The administration and Congress have a golden opportunity to enact such a bill and should do so immediately.
Commentary by Tom Naratil, president of Wealth Management Americas and president of Americas at UBS. He is also a member of UBS Group AG's Group Executive Board.
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