Once we lose small businesses, we lose Greater than tax revenues.
Small businesses receive loads of lip service but little or no appreciation–until they’re gone. By then it’s too late to do anything but mutter, “you don’t know what you’ve got until it’s gone.”
Small businesses aren’t just sources of tax revenues, they’re sources of a wide selection of jobs that may’t get replaced by Corporate America or the federal government. Just as importantly, small business owners and entrepreneurs are advocates for the neighborhoods, districts and cities they depend upon for purchasers and suppliers.
The livelihoods of the owners and their employees depend upon maintaining the viability of their neighborhood / district / city, which incorporates public safety and services resembling transportation and trash collection, and a minimum density of other private-sector services and amenities which give residents a protected, appealing atmosphere price visiting.
59.9 million Americans work at small businesses across the nation. An estimated 47% of Americans shop at small businesses at the very least twice every week, generating about 45% of the nation’s economic activity. In line with essentially the most recent available numbers from the U.S. Census, roughly 47% of U.S. employees work for small businesses, in comparison with 54.5% in 1988.
Small business entrepreneurs are risking every part they must open and operate a business. They’ve way more skin in the sport than city functionaries tasked with enforcing regulations and collecting business-related fees or their employees, who’ve the liberty to quit and seek employment elsewhere.
Residents are inclined to feel powerless to stop the decay of their neighborhood safety, services and amenities. They tried contacting their elected officials or municipal functionaries and got a meaningless feel-good reply which everyone involved knows is empty.
Small business owners are more willing to use meaningful pressure because they know the decay follows a sobering slide wherein incremental declines pile up and eventually trigger a phase change wherein the character of the neighborhood / district / city goes over a cliff nobody discerned: petty crime increases, paving the way in which for more serious crimes to proliferate; customers thin out after which grow to be scarce, and the zeitgeist goes from friendly to wary to unpredictable and even dangerous.
The core characteristic of of neofeudal economy and society is that it’s two-tier: there are two tiers of “criminal justice,” certainly one of wrist-slaps and vast white-collar crimes ignored for elites and the rich, and one other way more brutal and Kafkaesque for the remaining of us.
By way of commerce, Big Tech is free to determine monopolies and Finance escapes all of the supposed regulatory safeguards, while small business is throttled with endlessly multiplying petty regulations which have little or nothing to do with public safety or worker labor rights. Corporate America has the immense wealth and power to gut any regulations it finds onerous, but small business struggles to pay the soaring costs of compliance and the tripling of junk fees resembling business license renewals.
City-provided services degrade but the prices for the privilege of doing business triple.
The vast majority of small businesses are sole proprietors. (see chart below) Lots of these are online or at-home enterprises which can be invisible to residents walking down the sidewalk. The 5.4 million small businesses with lower than 20 employees are visibly consequential to the viability of bricks-and-mortar neighborhood commerce.
Demographics play a big role within the viability of small businesses. About 40% of all small businesses are owned by Boomers nearing retirement or already past the age of typical retirement. It won’t take much in the way in which of losses or stress to nudge these owners into selling or closing the business.
But when conditions are decaying, who’s going to purchase a struggling business? The grim reality is “nobody.” Owners are already working long hours and enduring high levels of stress. This self-exploitation can only go to this point before the owners’ health and/or funds break down in burnout or losses.
Municipal bureaucracies are inclined to see small business tax donkeys as something they’ll count on very similar to a gushing spring. Should one tax donkey collapse and shut a business, one other tax donkey will magically appear to select up the self-exploitation harness and begin a brand new business in the identical space.
Local-economy boosters like to cite the flood of latest business applications as proof the spring remains to be gushing, but a lot of these latest enterprises are sole proprietorships with no storefront presence and no employees. Many latest businesses that thrived within the post-pandemic boom will soon encounter the headwinds of recession for the primary time, and plenty of will find their enterprises blown onto the unforgiving rocks of monetary losses.
The phase-change shift within the character and zeitgeist of neighborhoods, districts and cities is difficult to reverse. Once people not feel protected, they won’t come back. Once the empty storefronts and homeless encampments dominate the landscape, they won’t come back. Once services deteriorate and trash accumulates, they won’t come back.
Municipal bureaucracies are largely staffed by individuals who have never experienced what an actual recession (resembling 1981-2) can do to commerce, tax revenues and small businesses struggling to survive. They’re confident that history demonstrates any downturn can be transient and the tax donkeys will appear as usual to fill the empty storefronts, lofts and offices.
But this time can be different. No latest tax donkeys will appear to gamble their fortunes and lives on starting a stupidly expensive-to-operate business, pay prevailing wages and advantages and all of the taxes, licenses and junk fees municipalities have piled on small business.
Once we lose small businesses, we lose greater than tax revenues. We lose the engines of employment and the business foundation of neighborhoods and districts. When these foundations crumble, those residents who see the slide down the slippery slope of decay sell their homes and get out while the getting’s good. Those that remain will regret their inaction.
Tax donkeys don’t appear by magic. There must be an infrastructure in place that enables an actual opportunity to scrape out a living despite the high costs and formidable challenges. If the infrastructure and character of a spot decay, so does the chance, and small businesses melt into air when it’s longer well worth the struggle.
