Levers for small business success in 2013

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First, the president highlighted tax reform as a key initiative to achieve more growth and international competitiveness. “Now is our best chance for bipartisan, comprehensive tax reform that encourages job creation and helps bring down the deficit,” Obama said. “The American people deserve a tax code that helps small businesses spend less time filling out complicated forms and more time expanding and hiring.” Indeed, America’s corporate rate of 35 percent is the highest in the world, and puts U.S. businesses at a significant disadvantage. But real tax reform cannot overlook small businesses – many of which were hit with a tax increase earlier this year as part of the fiscal cliff deal. Congress needs to craft a reform plan that would use the various loopholes and deductions to pay for lower tax rates – not to pay for more spending. A lower rate and a stable and simpler tax code would truly give small businesses the confidence and certainty they need to grow, invest and hire.
 
Second, if the president is still looking for additional revenue, as part of a “balanced approach” to deficit reduction, the government should look to a pro-growth solution that would actually help America’s small businesses. An efficient and smart solution is to speed up spectrum deployment in the U.S. by encouraging the government to sell a bulk of its unused spectrum. Already, major U.S. cities are heading towards a “spectrum crunch” that may result in slowed service or dropped calls. Similarly, without additional spectrum deployment, the promise of broadband for rural businesses may remain out of reach. By selling spectrum – which could raise billions of dollars – the government would not only help small regional and rural carriers, but would also greatly aid the deployment of broadband. Already, wireless broadband has enabled an entirely new business –the "app" economy – to grow to $10 billion in four years, creating around 500,000 jobs. According to a 2011 study by my organization, apps saved small businesses 1.1 billion hours annually, which equates to $17.6 billion in more resources to invest in their businesses. Imagine if all U.S. small businesses could get online and utilize the array of innovative apps and services made possible through broadband.
 
In fact, the president referenced the need to deploy even more broadband in order to attract foreign investment and inspire growth at home. Private sector investment in wireline and wireless broadband over the last decade has been astounding. These investments have directly boosted purchase orders and services for America’s small manufactures and created thousands of jobs across the country. Today, America’s small businesses are able to set up shop and hire talent anywhere, and reach customers across the globe. According to a 2012 study by Connected Nation, broadband-connected businesses reported revenues approximately $300,000 higher in annual median sales than businesses without broadband. The study also showed nearly one in three U.S. businesses (2.4 million) earned revenues from online sales, translating into $411.4 billion a year for the U.S. economy.
 
At the same time we seek this growth through the power of broadband, it cannot be regulated in the same way government regulated 19th century railroads. The U.S. has not become the world leader in 4G deployment because of government-owned networks. Instead, it has been the result of billions in private sector investment, and a competitive landscape. Fully enabling this model will allow America to continue to develop the next generation of broadband services which promise to translate into thousands of more jobs and opportunities for America’s small businesses.
 
If President Obama wishes to reignite a “rising, thriving middle class” it starts with supporting America’s small businesses. Fixing a broken tax code, stripping away obsolete laws and continuing to foster an environment that encourages investment and innovation are all keys to more jobs and more growth. If Congress and the president can work together to pull these growth levers this year, America’s small businesses can lead our nation back to robust levels of economic growth and job creation.
 
Kerrigan is the president and CEO of the Small Business & Entrepreneurship Council.