SalemNews.com, Salem, MA

February 19, 2013

Column: Keep small enterprise growth engine vibrant with tax restraint

Robert T. Lutts
The Salem News

---- — To balance the books in 2013, Gov. Deval Patrick is proposing $1.9 billion in new taxes via a combination of changes to sales tax, income tax and a number of changes to allowed deductions. He would like you to believe these tax increases are needed to continue to operate our government effectively to serve all of the people of Massachusetts. This nearly $2 billion proposal represents about a 6.2 percent increase in the current level of spending of $32.2 billion.

In my role as chair of the North Shore Chamber of Commerce, representing more than 1,500 businesses on the North Shore, I would like to voice the concern of business owners like myself who believe it would be harmful to job creation and business growth to impose more taxes on both individuals and business owners. After the crushing economic downturn in 2008 and 2009, our economy is now just starting to get on its feet and businesses are starting to feel a bit better about the outlook for 2013. Now is not the time to increase business overhead with more tax burdens.

Over the past three years, businesses across the nation have been forced to do more with less. Businesses took advantage of new advances in technology to improve productivity: We asked the same staff to take on more roles, we implemented efficiencies in materials used, and we managed to continue forward in spite of challenging business conditions. The result is that many businesses continue to stay healthy and have adapted to a less-than-desirable economic conditions.

Rather than leading off 2013 with new ways to tax these resourceful, hardworking business entrepreneurs who are daily adding to the strength and viability of our economy, I challenge the governor and all public officials in Massachusetts to enter 2013 with the same creed that drove business leaders in the last few years. Do more with less. Create more efficiency in your operations, be creative in the use of technology and ask more of your current staff. Many believe there are a wide range of areas of government that could be modified to improve efficiency. Government programs can operate more efficiently with fewer staff and less resources, thus allowing our tax dollars to go further. It’s time we recognize that this nation does not have a taxation problem — we have a spending problem. The solution rests with limiting the temptation to regularly raise, expand and tweak the tax collection machine. It’s time we just say it as clearly as possible — no more taxes. Let’s optimize the tax revenue we have and let our businesses continue to grow and create more jobs.

We must recognize that most of the growth in our economy comes from the innovation and entrepreneurial creativity of the millions of small-business owners in our country. According to the U.S. Census Bureau, we have more than 27 million businesses in the United States. Only 18,000 of these businesses have more than 500 employees, and only 90,300 have more than 100 employees. We are, in fact, a nation of small entrepreneurial enterprises. More than 26.5 million small U.S. businesses are employers of fewer than 20 employees. When any one of these adds 10 percent to their staff, this adds one or two new bodies to the employed base of our country. It doesn’t sound very exciting, but when you many of these 26.5 million businesses adding one or two to the payroll, this turns into a very large growth engine. We must keep this engine of growth strong — the best way to do this is to help these businesses grow and prosper by keeping their obstacles to growth low, which would include a moderate level of regulation and taxation.

Massachusetts taxpayers are now paying, on average, about 10 percent of their incomes to both state and local taxes. This means we are about the 11th highest-taxed state in the nation. One must remember that additional costs in the form of new or expanded taxes will mean increased prices for goods and services. Let’s keep the cost cycle reasonable with a more efficient and responsible government.

On behalf of the 26.5 million job-creating small enterprises in this country that are now helping create the next large growth phase for our country, please refrain from further taxation that will limit our ability to grow and create jobs. With proper incentives, the innovative entrepreneurial class of our economy is an amazing growth engine. The energy, technology, health care and industrial sectors of our economy have shown incredible innovation in the last few decades — much of it based right here in Massachusetts. The new value and jobs created by these entrepreneurs is the powerful growth component to our diverse economy. Let’s do everything possible to keep this growth engine strong and resilient.

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Robert T. Lutts is chairman of the North Shore Chamber of Commerce and president and chief investment officer of Cabot Money Management Inc. in Salem.