Pro-Con : Will Tax Cuts Help Small Business?
MARVIN R. SELTER
Founder and chairman, National Staff Network (which leases employees to businesses), Van Nuys
YES: More will be invested in tax-producing jobs This country is based on capitalism, and the way to have this country grow is by putting [in] more capital. By reducing our taxes, this provides more capital and this capital will go back to the country. You’re feeding the economy on a continual basis.
The full impact of the tax cut is going to the small entrepreneur. [For example], if I’m going into a new business and invest $100 and I know that $25 to $35 of it is going to go to taxes--whether that be real estate, income or corporate income taxes--that obviously gives me a very restricted working capital, which restricts my growth potential.
Even more important, if I go out of business, regardless of how much the tax rate is, that revenue base disappears and you have no income coming to the various governmental agencies. But if you encourage me to stay in business by lowering my taxes, it gives me more capital and more dollars to reinvest in business. Therefore I will grow.
If I grow, the vendors who supply me grow. My labor force grows. In the long run I obviously will create a higher revenue base for city, county, state and federal governmental agencies.
Because taxes are so high, there’s been an erosion of the revenue base and if taxes go up more, obviously I have less money to reinvest. I cannot grow my business.
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LAUREN BELL
Cofounder and executive chef, Lo-Cal
No-Chol Restaurant, Westlake Village
MAYBE NOT: Don’t be hasty since public safety is at stake. I think you can’t arbitrarily go about cutting taxes without recognizing the consequences and the impact on many areas you take for granted.
Within our industry particularly, I’m thinking of health code regulations. Knowing how valuable those codes are in terms of being able to serve safe food, if you were to eliminate [the Health Department], a lot of restaurateurs would be able to get away with things that would potentially cause hazards such as food-borne illnesses.
Right now I’m filling out an application for a conditional use permit for expanding our current location. And as tedious as this is--complying with all the different requirments--I know that when we had the earthquake two years ago we were fortunate to have only three plates break. We were operational that day. I really doubt that, had taxes been cut and those agencies not been there to enforce compliance with the building codes, we would have come out of that unscathed.
There are many things that we should all pay taxes to support--schools, obviously. I’m in an area where our community is very much involved in the schools. Therefore the property values don’t depreciate the same way as in other areas. [Then there’s] unemployment compensation. The object is to make certain that the taxes that are paid go to an efficiently run system.
