washington

still remembers taking a break on this hearing in cthe role o the export import bank and china. will take a look at the washington journal. >> welcome back. we are joined by jeff -- he is the vice president for the national federation of independent businesses. we're talking about the state of small business in the u.s. welcome to the program. let's talk about the business owners that are part of the organization. how would you describe them? >> the average member has 7.5 employees. we started in 1943 and it was

started as an alternative to a lot of large business associations. we have a cap on the membership. if you are a small business owner, you can pay a small sum of number to get a membership. access at the state level which is a real alternative. if you are concerned that your voice is not being heard in washington as a small business owner, we give you your voice back. >> it has been several years since the pandemic. our small business is doing right now in the u.s.? >> there are two bigger issues. we have been tracking these for decades. inflation as we know as consumers and business owners has been a problem. anything that can help this would be welcome to small business owners. this is a huge issue. one of the reasons that inflation has been difficult to deal with, it is hard to get good workers and employers have

had to increase wages and benefits which has added to inflation. it has been a difficult cycle for small business owners. >> you put out the small business uncertainty index about optimism and how optimistic they are. there is a lot that goes into it, i understand. how optimistic are small business owners? >> the impacts are below historic averages. there are a few things that go into that. when the economy is strong when you measure it towards the unemployment rate, there are issues with inflation and access to a qualified workforce. a lot of people understand that there is a low unemployment rate and business is doing okay. there is a strict regulatory environment that can dip the optimism. >> from the jobs reports numbers, we have 272,000 jobs added and in may, the

unemployment rate was 4.0%. our small businesses able to fill the position that they've got? and how difficult has that been? >> the difficulty has been trying to fill those positions. because of that, we are finding that business owners are increasing compensation to try and attract the best talent. it is a real challenge if you are a small business owner. you might not have platinum business benefits that a lot of other employers have. they have more unique challenges when trying to attract employees. >> we talked about inflation. what about interest rates? how is that affecting small business owners? >> for most small business owners there is a robust capital market. they can get credit. it is much more expensive to get credit. interest rates, historically they have been very low up

until recently. with the increased interest rates, it makes it more expensive to get credit and is not helping inflation very much. newly you can call and if you have a question, or comment. from the national federation of independent business is about small businesses. we have a line set aside for small business owners. jeff, in an interview with the white house council of economic advisers, asked about the rate of those working post-pandemic. i will play this for you and then get your response. >> the noise in the wake of cobit is remarkable to me that economists are still having so much difficulty forecasting data which is why we see these

numbers frequently blow past expectations. we are seeing the participation rate struggle to get back to where it was before covid. when will that happen? >> i will point out on the participation rate, i know we talked about this earlier, number we have been watching closely as the number of women between 25 and 54, we see another month of record high labor force participation rates. there has been -- some of that is about the aging labor force and what has been happening to older workers. you are right, joe, this recovery and this pandemic has made it hard for economists to rely on the tried-and-true models that we have had. our analysis has to be a little bit different on agile given what is happening. given for the most part, we have a good sense of what is

going on. it was nice to see this month that we exceeded expectations so much on the payroll number. >> what you think? >> obviously covid was extremely disruptive to the labor market. the shutdowns, long-term unemployment for certain industries, the programs that increase the employment compensation made it so that there was a significant lag to get people back to the workforce. from some of those increases of the employment compensation keeping people home. those have lapsed. it is a struggle when you have a disruptive event to have you will back to the workforce. a lot of people work in the same industries. lot of people decided that i want to work remotely. maybe i don't want to do what i've been doing for the last 20 years. i have had a year to sit and reflect on it. we will support any policies

that get people into the work force to help the small business economy continue to thrive. >> another issue was supply chain issues for small businesses. how many recovered from that? are there lingering issues with supply chain? >> we have some lingering issues. it is in a much better place than it was several years ago. that has significantly improved. from what i understand. it is still affecting inflation to a degree. not to the degree it was several years ago. >> the president of your organization wrote an opinion piece with a headline, two ways that congress can give small businesses relief. one of those is the trump era tax cuts that will expire next year and to make those permanent or extend them. >> next year we are looking at a tax increase on 30 million small business owners. when you start a small business, odds are you will be a sole proprietor. these are called a pass-through

business. you hear about it all the time. it went down to 21%. that's great. the vast majority of small business owners are passed those businesses. they pay the individual rate. what was put in the tax cut and jobs act for the small businesses was a 20% deduction. the top individual rate was 21%. if you are a sole proprietor, and an entrepreneur, i am paying 37% effective tax rates. might giant competitors are paying 21%, that's not fair. this is the 20% pass-through deduction. this brings the effective rate down a lot closer to that rate. one of the other things that go into the individual rate, this also increased at the end of 2025. it goes from 37% to the

deduction that goes away. for significant tax increases, we have 30 million small business owners. another thing is the regulations that affect small businesses. >> all kinds, state and federal level. the one that is flying under the radar right now to make sure that congress is aware of, is the reporting requirement. this is targeted at small business owners and that does not happen very much when large businesses are exempt. this was thrown at the authorization bill from a few years ago. requiring any business with 20 or fewer employees, 20 or fewer employees to register their business and anyone who is a beneficial owner with 25% equity in the company or what has substantial control of the company. what does that mean? it is broadly defined.

if you own a small restaurant and you have a -- you have to register them. >> what does it mean to register? >> that is the financial homes enforcement act. they want to stop financial crimes. they are an intelligence agency to stop financial crimes. to register with them, if you are one of the small businesses, go to their website and file your business address, a copy of any owners drivers license, yes, exactly. and a few other pieces of information from your taxpayer identification number. you have to file that and by the end of the year, you can go to jail for two years and get fines for late filings. this is a scary thing. done to address money laundering. this is not a one and done

registration. if any of the information you provide changes, you have 30 days to update it. if you have a new general manager, you have 30 days or you can go to jail. if your license expires, the last thing you want to do is give them the information. mostly getting to the dmv. you have to let them know. if your business address changes, you have to let them know. it is a lifetime commitment for small business owners. we do not think it will be effective in stopping money laundering and we can get into that in a minute if you're interested. it is a huge burden on small businesses. it is about $77 billion for reporting costs. >> are you getting any traction in congress to get that repealed? >> there's one in the house, one in the senate. warren davidson has a bill repealing big brother overreach act. there are several cosponsors and new bills in the last month

or two. it will be difficult to repeal. whenever something gets past, and it is this big and has supporters, it will be difficult to repeal. at a minimum, members of congress are very aware that there are a lot of small business owners out there that find this extremely burdensome. let your member of congress know if you are one of them. >> okay, let's go to the phones now. good morning. >> good morning. thanks for taking my call. i just have a question about the economic analysis when it comes to taxation. if i am to understand this correctly, on one hand, because of the unemployment benefits being raised during the covid area -- era, on the other hand, there is this issue of higher taxes and tax cuts that are about to expire next year.

taxes are the deflationary pressure. the same with interest rates. it is harder for term because the cost of money is higher. that does not just affect small business owners. it affects everyone else. to reduce demand and inflation will be slowly abated. inflation is turning down. with tax cuts expiring, that will even be more the case. they end up causing inflation. i just want to ask, how do we square these issues? thank you. >> again, 90% of small business owners will see a tax hike in less than two years. this rate is permanent. if you are comfortable dealing with inflation by taxing the smallest businesses in america

and making them less competitive with large business owners, that is one way to do it. i don't think the membership would be supportive of that. the average member has about seven employees. these are not big businesses. this is 90% of the small business economies with a tax hike. let's say that you own a small coffee shop on main street. a lot of us love going to these coffee shops. your federal effective tax rate could be 40% if everything changes. that is not counting state. the federal effective tax rate for starbucks will be 21%. some people might say, hey, you have to increase these taxes to help with inflation. not everything exists in a vacuum. this will damage the small business economy and affect entrepreneurs when you do this. every entrepreneur starts paying this rate and they can take advantage of this. if we are comfortable increasing their taxes the

biggest ones being kept the same, we will not support that. >> what you think of the biden administration record when supporting small businesses from your perspective? >> i think the administration says a lot of the right things. they put out a lot of statement saying that small businesses are affected. the facts are the facts. the regulatory environment has been problematic for small business owners. we have seen a host of new regulations especially from the department of labor that have been making things significant and more difficult for small business owners. there are proposals in the residence budget. one of the most frustrating things coming out of the white house, they say that we are not going to increase taxes on

small business owners because we will cap any increases and we cannot do anything for anyone making more than $40,000. if you're under 400, there will not be a tax increase. there is no definition of a small business that stops at $400,000. it is often 500 employees. this does not take home $400,000. you have $400,000 in income which is taxed in both your employees and goes to expansion. and then you take a salary that is taxed separately. the $400,000 argument makes it so they will not see tax hike because of that. it falls a little flat. >> how do you define a mall business to >> we let sba make that definition. >> 500 employees kind of seems like a big number.

>> we feel that is fairly large also. it varies by industry. some industries are larger than others. frankly, an easier one, it could be 50, it could be 25. still, if you have 25 employees, you can employ 25 people with $400,000 in revenue. you need a lot more revenue if you want to pay her employees. >> let's go to the republican line. joe, good morning. >> i love c-span go i've been calling your network for 30 years. we just named him the number one champion of small business and taxpayers in the country. he is on national television every day. a great friend of mine. he is doing a great job for small business and taxpayers. we are members of the georgia legislator who are going after

government wages and this man knows that there is tons of waste in government. we are proud of johnny and matthew for going against government waste. we are naming him the number one champion of all businesses and taxpayers in the united states. >> do you agree with that? >> that is great. we have not worked with steve moore very much. i'm glad that you love small business and we wish you the best of luck. >> mike, good morning. >> a couple of quick comments. the first is the real question should be how many small businesses are there in the united states compared to 2019? and how many americans are employed by small businesses compared to 2019. those are the real questions to see and gauge the health of

small businesses. there are not enough workers to fill all these positions. that is a red herring. this gentleman, i respect him very much. what you should be saying is, the education system needs to be changed. we need to stop wasting our time with crt, pei and all of the other sector relations. they need to learn the fundamentals of when they get out of school, they have the brains and capacity and thinking ability to fill these positions that are needed in all types of small businesses.

to go back to the first comment about comparing 2019 to now . i do not have those in front of me without my computer, but generally speaking there is a little over 32 million small business owners. most of them are so proprietors . the number significantly smaller if you include small employers for obvious reasons. they employ about half the workforce, and it changes year- to-year. so it is a huge number of businesses, but employs about half the workforce.

in terms of workers i think small business owners are agnostic about how they get them. they just want to have good workers. and it is industry dependent. we vary across industries, so we have restaurants in manufacturing and retail. every type of business you could think of. when you get down to industry specifics some people need skilled workers and some don't. it really depends. that education component does matter. they are fairly agnostic about how they get the workers. they just really want them. one thing i can speak to is that minimum wage is very difficult for small business owners. wage and benefit issues are very challenging. if you have less than 10 employees you do not have the economy of scale of an amazon to offer them. you do not have

the profit margins to offer those. whenever we look at wage and benefit mandates they usually have a disproportionately large impact on small business owners.>> they ask you how you feel about illegal immigration. >> it generally does not take positions on immigration issues be one of the great things is we have a small process where we actually ballot our members and ask them how they feel about issues. if we can't get 70% consensus we don't take a position. those issues we have found can't get consensus from membership, so we haven't taken a position on it.>> good morning. i'm curious about talking about the reporting requirements that are coming up at the federal

level. you are mentioning how much it would cost small businesses. is there a fee required to report these changes? i am curious if you can do it online. how would this cost small businesses that much money? >> this is because there are 32 million llcs expected to report year one. whenever we have a big regulation they have to come up with a cost estimate both for the economy at large and for small businesses. this was their tenure estimate. they basically did a study to say how much time is it going tuesday, and they come up with a dollar amount. they will say that is worth x,

and that is how they come up with the estimate. they then give you a total analysis. >> they do not actually charge the for a small business to register. >> it is free. you can go on the website to register.>> how is it going? i work for a small business, and personally i think that i am getting cut out of a lot of videos i should be getting in terms of the hours that i work, and i am constantly being forced to work overtime and not necessarily getting the benefits of working overtime. i wish i had health insurance. that would be nice. i was just wondering your opinion on that from the workers perspectives. i know you were talking about the meeting the breaks. we have to do stuff that is

well out of our job description. >> i hear you. your employer is required by law to pay you 1.5 for overtime, so you should be getting compensated for that. the percentage of small business owners who offer health insurance has dipped by 8% since the passage of the affordable care act. one of the reasons for that is because the small marketplace. if you are not subject to it. it has significantly more regulations and requirements, so it has been a real challenge for small business owners. one of the things we are the most is it is hard to track qualified woerif you are not able to offer health insurance. we are urging congress to come up with new solutions to help recethe cost of health insurance.

if you ara small employer you can actually offer health insurance benefits to attract great workers. >> we have question about a.i. has the overall jobs number risen or shrunk since a.i. became a popular tool from human employers in the job market? how much is the rate of substitution of human workers with a.i. systems increased since the end of the covid-19 pandemic? have you looked at that?>> i have not picked a.i. has turned into quite the buzzword lately. i think many small business owners are not familiar with this. if you are just operating a restaurant or a small manufacturer you are probably not too familiar with how this has been affecting you. realistically it is computer technology, and that has been changing the work place for a long time. think about the automated checkout. the computer is a.i., so this has been changing the workforce

for some time. i think it will continue to do so. >> let's go to albany, georgia. larry. >> i want to talk about the economics and what president trump said that he has had this great economy. i have a small business in georgia. under president obama in 2009 we had small businesses, and we had a great economy that came under president obama, and president trump is taking the credit for it, and we know it's a lie. we know in 2015 our economy was the best. in 2016 when president trump he started to say he gave the economy, but we know different. for small businesses. i own a small business in georgia appeared during that time we have done great between

2010 and 2014. what i would like to say to you is to keep up the good work. i like what you are saying, and we had a problem when we had to disperse money during covid because my small business went down. i filled out the forms and everything, and on the last day we did not receive it here. we have a lot of people that stole the money from us. what i want to ask you is if you can could you can tell us how the economy looked in 2015 according to how the economy looks in 2016? >> what kind of business do you run? >> i run a lawn care business in albany, georgia. >> how is business going? >> because of what happened i

had to shut down my business. because the grant that i should have gotten at that time i had to shut it down, but i am not complaining because now i am at retirement age and won't go back into the business, but it was great under president obama. >> all right, larry. >> let me just say i am so sorry about your business shutting down, and i know owning a small business is extremely difficult. there is a lot of pressure. from just anger flow to dealing with compliance and paperwork and making sure you can get

qualified employees is extremely difficult. if we go back in time to 2015 and 2016 president trump selected. 2016 i would say really depends on your business and industry if you had any changes. the first year of the new president. when that happens generally speaking but one thing that's positive that trump did was try to reduce the regulatory burden so that folks like you have more time to spend ruing your business rather than dealing th paperwork because if you are a small business owner you know that you do not ha a compliance or a legal team. you do all of the paperwork yourlf. that was an immediate positive thing. in 2016 we had still seen the passage of the tax cuts and jobs act. i cannot speak to specific business conditions on the ground where you are from, but that is kind of the bigger picture of what we were looking at. >> he says monday block small

business owners are complaining they are being undermined and possibly sabotaged and held to a higher standard than their counterparts of a different race. like unfair loans and or supports not given. permit and costly overhead to operate. when the supports of been introduced to eliminate this feeling for block small business owners? >> i cannot speak to anything specifically to block small business owners, but there are federal and state laws that do not allow lenders to discriminate against businesses based on what their race may be. there shouldn't be any practices for permitting as well. i would encourage if you feel you are being discriminated against reported to the authorities. that should all be illegal and has no place in our economy. >> if you are a small business owner you can give us a call. use the same line to text us.

otherwise call us. on china could do for small business? guest: we fshave about 10 minutes left in the segment. i want to ask you about the tariffs. we have this article that says that he slaps china with an $18 billion tariff hike, but will that punish small business supply chains? have you looked at were tariffs on china could do for small businesses? >> it comes back fairly split. if you are in an industry. if you are a restaurant owner or a retail person in the

financial services world you might be okay with that because you think this is something that can help make united states more competitive with china. as an organization we have not taken strong positions because we cannot get the 70% mark of our members supporting the policy. i do understand if you are in certain industries they can be difficult to deal with and very costly. >> in jamestown, south carolina. you are a small business owner? >> yes ma'am. the last lady that called said how good it was when barack obama was president. we could not get a truck that would run because of the exhaust systems on them for about four years. i thought i was going to have a heart attack when the truck fell apart.

i do not hear the people complaining about the cost of everything in the supply chain, but when trump was president we did not have problems getting parts for the trucks. he rolled back the stupid regulations on these vehicles, but they still keep pushing it, and it's killing small businesses. the government control about anything you do with small business. you almost have to being the government to let you. i do not see it getting any better if trump or biden wins. i do not see the small business getting any better for anybody unless you get a government check. i will leave it at that. have a nice day.

>> thank you for checking in. you mentioned excessive regulations. one thing a lot of people forget is they think about the federal government because that is always in the news or that drives the discussion. state and local government are also entities that they deal with every day in terms of the regulatory environments. also one thing for people to remember. if you are going to pass a relatively minor federal regulation that doesn't exist in a vacuum. they are doing local and county state permitting and state regulations, so these are all cumulative and in the case of your business it seems like they are very difficult to deal with. >> does your organization endorse candidates?>> yes we do. we do not weigh in on the presidential election, but senate, congress, and local elections. >> good morning. i was just going to say i am a small business owner of about 20 employees. i have been doing this for a long time. it seems like more and more

regulations. i do not think people realize customers and people in general with corporate jobs do not realize what a burden it is between health insurance and banking and the requirements for banking or you just name it . a little log that they have said you have to go to whatever he said. i cannot remember. submit your information. all of these little things add up, and it takes a lot of time and costs money. it is not something that everybody -- he makes it sound easy. jump online and register. that is great, but it's more difficult than that. it's a big burden on small businesses and it is becoming more so in the last five or six years it seems like. >> you make some great points. one of the things we always

encourage congress is to take small businesses into consideration when you are making regulations. is actually an act that requires congress to do that, but there are a lot of loopholes that allow agencies to get around that. they are supposed to consider less burdensome regulatory alternatives for small business owners when making regulations, so what does that mean in practice? it means they have a paragraph or two singly considered it for small businesses, but we decided not to do it, so they have encouraged congress to reform the flexibility act to ensure that agencies are actually considering small businesses but wouldn't it be a great idea to have those for small business owners? i think that would really help