The following is a recently published editorial by Kevin Shivers, executive state director of the National Federation of Independent Business.
We all do
it. On New Year’s Day, we step on the scale or look in the mirror and then
resolve to improve our lives or the shape we’re
in. If Pennsylvania policymakers took a good look in the mirror, they’d
notice our state economy is in a funk. Over the past two years, the state
unemployment rate has increased to 5.7-percent, while the U.S. average fell to
4.6-percent. Over the same period, employment in Pennsylvania grew by only
1.35-percent while national job growth rose at twice that rate.
The
state’s Independent Fiscal Office also reports that over the next ten years, the working-age population (20-64)
will decrease by 181,000, while the 65 and older age group will increase by
678,000.
We have a
jobs problem. As Pennsylvania’s older
population explodes, lawmakers must do more to boost business growth and attract
workers. Otherwise, we are headed for
trouble.
The
National Federation of Independent Business (NFIB) offers a simple solution:
fix the climate for small business in Pennsylvania, and you fix the state
economy. The group offers a list of reforms that lawmakers should add to their
New Year’s resolution list:
Resolve to
control spending. Budget battles combined
with threats of tax increases reduce business confidence and hamper hiring. It’s
encouraging to hear legislative leaders talk about restructuring government. The
Taxpayer Protection Act would limit spending growth. Thirty states do this. Government
pension costs are the largest cost driver.
Lawmakers should once and for all resolve to fix this broken system.
Policymakers
also should resolve to place a moratorium on new regulations while they
establish a review process to repeal outdated rules or regulations that provide
little value. Small employers are buried in bureaucratic paperwork, much of
which offers little environmental or consumer protections.
To improve the regulatory climate
policymakers should fix the permitting process. Countless small-business owners
have waited years to get permits from the Department of Environmental
Protection (DEP) and local governments. Many frustrated business owners simply
give up or divert business capital to projects in other states. Bureaucrats must
be held to strict timelines to review applications. Decisions should be based
on law and not subjective criteria determined by the bureaucrat.
Lawmakers also
should resolve to fix the state tax code.
The state tax code is so far out of sync with the IRS code that small-business
owners need to keep separate sets of books. A fair tax code should be
consistent and encourage growth through entrepreneurship and private sector
investment. Economic development schemes, like the failed Keystone Opportunity
Zone (KOZ) program, put politicians and bureaucrats in charge of picking
winners. Every other business winds up paying a higher tax bill. Let’s create a
tax code that fosters investment and growth.
Pennsylvania
should allow small businesses to deduct expenses for new equipment purchases, thus
incentivizing small businesses to grow. The federal tax code allows businesses
to expense $500,000 per year. At least 33 states allow the same.
A fair tax
code also shouldn’t punish entrepreneurs who start and grow a business and then
sell it and invest in another venture. The IRS and most other states allow
owners to use earnings from the sale of one property toward the purchase of
another similar property. In Pennsylvania, we penalize such growth.
Another
area where small business is looking for legislative resolve – workforce
development. Despite rising unemployment, many small-business owners struggle to
find qualified workers because of a skills gap. Meanwhile, the government
earmarks workforce investment dollars only to specific training for certain
jobs in certain industries. Let’s simplify things. Let small employers deduct
their employee training expenses.
Lastly, policymakers
should resolve to clean-up our courts. The lawsuit industry is driving
businesses out of the state. Court dockets that are
clogged with out-of-state lawsuits prevent local citizens with
legitimate claims to access their courts. Lawmakers and the courts must end the
practice of jury shopping and enact taxpayer protections that require state
agencies who use private lawyers to disclose the terms of those contracts with
the public.
With these
changes, we can put Pennsylvania back on a path to prosperity.
