LANSING – A survey presented at the National Conference of State Legislatures determined that overall, small business owners felt reasonable, well-enforced licensing is a bigger issue than tax code due to the fact that their competitors who are not necessarily playing by the rules would have an unfair advantage.
“Licensing is such a big thing that respondents said they care twice as much about (it) over the tax code,” said Jon Lieber, chief economist for Thumbtack, a California-based business that helps clients across the nation get connected to the right people for their business needs.
Also in the top three issues for small businesses nationwide was having access to training programs and simple tax regulations.
Lieber, speaking at the National Conference of State Legislatures in Minnesota on Wednesday, said licensing and especially enforcement of it was such an issue because the businesses who follow the rules complained that their competitors who did not could get by for a cheaper price in doing so. If licensing enforcement was more satisfactory, it could create a more level playing field.
“Regulations entail a lot of time costs, and time costs money,” Lieber said, noting that one group seemed to be entirely opposed to licensing while another said they were okay with licensing but that their government wasn’t enforcing it. “Enforcement was a really important ingredient here.”
The Small Business Friendliness Survey presented by Lieber analyzed the responses of more than 12,000 entrepreneurs nationwide, but Lieber also noted those surveyed did not include manufacturers or retail operations. And the survey measured perceptions, he said, “So we could be hearing from grumpy folks.”
Michigan ranked as a C- in overall friendliness for small businesses, the survey concluded. That is a slight increase of a D for the previous two years. The top issue in Michigan seemed to be the ease of starting a business, which earned a D+. But the bright spot for Michigan, earning a B+, was the ease of hiring.
More specifically, Michigan had the worst grades for its tax code and its zoning, which both earned a C letter grade. Regulations earned a C+ from Michigan respondents to the Thumbtack survey, while health and safety, licensing, and environmental considerations earned a B. Michigan respondents gave the state’s policies on employment, labor and hiring a B+, but a B- for training and networking programs.
“Small businesses appreciate training programs, meaning things like the Chamber of Commerce, mentorship programs, and industry-specific programs,” Mr. Lieber told the audience at the NCSL seminar. “Businesses that were aware of these training programs were much more likely to feel supported by their state.”
The survey also noted that Michigan’s small businesses rated the state as the third-hardest state in which to get health insurance, but the state was among the top ten most prepared nationally for the implementation of the Affordable Care Act. Michigan’s small businesses were the third most pessimistic in the country about the outlook for the local economy.
The top-rated states overall were Utah, Idaho, Texas, Virginia and Louisiana. The lowest-rated were Rhode Island, Illinois, California, Connecticut and New Jersey.
On tax policy, Lieber said respondents nationally felt that tax complexity was more important than their tax rate. In fact, 64 percent of respondents said they pay the right share of taxes, and even in high-tax states, “this wasn’t a huge thing,” he said.
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