And small businesses are getting killed. Economic Populist noted that U.S. start-up companies are at record lows of 8 percent.
The nation's business startup rate fell below 8 percent for the first time in 2010, marking the lowest point on record for new firm births. New firms as a percentage of all firms continued a steady downward trend in 2010 – going from a high of 13 percent (as a percentage of all firms) in the 1980s to just under 11 percent in 2006 before making a steep decline to the 8 percent in 2010 – the most current year of data available.
In Where Have All the Young Firms Gone (pdf), we have some god awful statistics on businesses starting up.
In the 1980's start-ups were 12-13% of all firms. Now they make up 7-8% of businesses and also individually employ less people.The Republic Report offers some insight into why that is. In a word: ALEC.
The corporate front group American Legislative Exchange Council (ALEC) likes to claim that it’s about “free market” ideas. But if that were true, it wouldn’t be fighting against conservative lawmakers to manipulate tax policy to harm mom and pop stores in favor of giant corporations (who just happen to be their corporate donors).
Here’s how they do it.
Right now, massive online retailers like Amazon.com or Newegg get away without charging sales taxes in most states that they operate in.
That’s bad for mom and pop, brick and mortar stores, which are required by law to charge sales taxes. So, for example, a brick and mortar clothing store in Atlanta might have to charge a four percent sales tax by law, but Amazon will be able to draw customers by bragging that it can save people money by not charging these taxes.
Although consumers certainly enjoy the benefit of buying items from Amazon tax-free, over the long term consumers and workers will be harmed if Amazon and other giant on-line retailers put thousands of local merchants out of business and competition for consumers is undermined.
The obvious solution to this is to require every store — whether its a mom and pop operation or a massive online retailer — to have to charge the same amount in sales taxes. That would end this special “Amazon loophole.”
Real conservatives tried to get rid of that loophole in Texas, South Carolina and Tennessee. If you've been following ALEC, you know what happened:
But ALEC stood with the online retailers — like Amazon.com, which is a funder of the organization — against these conservative Republicans who sought to close this loophole. Amazon vigorously argued against tax fairness proposals by some ALEC legislators and successfully defeated any movement within the organization towards closing the loophole at ALEC’s 2011 meeting in New Orleans.
