Believe it or not, our current state government is a both a burden and obstacle to the growth of small businesses in Connecticut. Just ask any Connecticut business owner about the oppressive over regulation and specific taxes that they must cope with each and every day.
These issues MUST be dealt with later this month a the special legislative session on job creation to minimize the invasive policies that discourage businesses from setting up shop in Connecticut.
To ensure that we are prepared to talk about common sense solutions, I along with the House Republican Caucus, offered a list of recommendations to the Governor’s office proposing certain ways to improve the state’s grim business climate and bring small business growth back to Connecticut.
Small businesses make up an overwhelming majority of Connecticut’s private sector economy, and we must support them to ensure statewide economic success. The small business community is incredibly diverse, even including those running a business out of their home, like daycare owners or a bookkeepers. According to the U.S. Department of Commerce, businesses with less than 500 workers account for nearly 98 percent of Connecticut’s employers and half of its private sector jobs. Around 88 percent of these roughly 75,000 small businesses have fewer than 20 employees.
The growth within the small manufacturing sector of Connecticut has proven to be an ongoing struggle over the past few decades. Ironically, Connecticut is also one of the most highly concentrated manufacturing states in the nation. The Connecticut Economy recently found that small manufactures are approximately 28 percent more numerous in Connecticut than anywhere else in the nation, yet we still appear to be failing to meet the standards that are necessary for growth.
The national economic recession has certainly made it difficult for existing small business to prosper, but even during better times, like between 1996 and 2006, Connecticut lost 2.2 percent of it’s small businesses while the average state in the country saw a 10 percent increase. So despite a decade of economic prosperity, Connecticut had a true challenge sustaining business growth within its own borders.
So what is to blame for Connecticut’s ongoing lack of development in the private sector?
Small and large business employers alike are quick to point their fingers at Connecticut’s strict regulations and high tax rates as the conspirators standing in the way of industrial development. Small businesses have a tendency to be much more affected by these heavy regulation and numerous taxes simply because of their smaller wallets and smaller workforces to help navigate through tedious and ever-changing red tape regulations.
We have laid out clear job creation and development plan to start to repair how the state deals with businesses.
These recommendations include providing general tax relief for small businesses by not taxing 30 percent of a company’s income as long as that 30 percent is reinvested in the company’s inventory, capital improvements, or company expansion.
Also, expanding the new job creation tax credit by permitting greater eligibility criteria would afford a break to businesses. Further expansion of the tax credit will make any business eligible to receive tax credits if they create one new job.
Also, eliminating the 3.5 percent withdrawal tax on the Manufacturer’s Reinvestment Account would enhance the program by opening it up to all small manufacturers.
Other proposals include expanding the current Angel Investor Tax Credit Program by reducing the required amount that angel investors are required to invest. By increasing the current 25 percent tax credit that is applied towards the investor’s income tax liability and including all business sectors, companies with more than 25 employees, and companies with more than $1 million in gross revenue can certainly provide more incentives for investment and growth.
There is no question that these are tough times. With a 9% unemployment rate and fledgling record on jobs over the last 20 years, it’s time to get serious about jobs. Let’s stop the political gamesmanship and do what is needed to change the perception that Connecticut is a bad place to do business.
If you would like to comment on this or other issues of concern to you please do so by contacting my office at 1-800-842-1423 or visiting my website www.reppiscopo.com. I would love to hear from you.