Main Street Menace of the Week: Senate Bill 8 (Hertzberg)

John Kabateck
NFIB State Director in California

While the legislature is in session, the National Federation of Independent Business/California will be profiling anti-small business bills and initiatives and the adverse effect they would have on California’s job creators. This is the first column of the 2015 series.

Each time a new crop of legislators comes to Sacramento, I along with small business owners around the state hope and pray that they will make decisions and put forth policy that will help our state and nation’s number one job creators. Alas, we continue to be disappointed time and time again, and unfortunately 2015 is looking like more of the same from those in the capitol.

Take for example, Senate Bill 8, proposed by Senator Robert Hertzberg. SB 8 would be a $10 billion dollar sales tax on services that would apply to everything from accounting to gardeners. Yes – that is billion with a ‘B”. Senator Hertzberg’s justification for this legislation is that it would help avoid the state’s ‘boom and bust’ tax structure. And where would this increased revenue go? Supposedly to education and local government, among other areas.

Many small business owners are wondering, “Why should anyone trust this tax increase, especially when the last huge tax increase Californians agreed to was supposed to help kids in the classroom? Where did the Prop 30 money go?” I guess that’s a topic for another column.

The bottom line is this – why should small business owners – many of whom provide services themselves or pay for services like accounting or cleaning, bear the burden of this tax increase? If small employers have to live within their means, shouldn’t the state have to as well?

In recent years, California’s small employers have absorbed an increase in the minimum wage and increased costs for providing paid sick leave and health insurance as mandated by the Affordable Care Act. A sales tax on small businesses is about is regressive as it gets… the very people they aim to help will be the first ones to suffer the consequences.

We start to sound like a broken record every time another cost or mandate on small employers is proposed, but the reality is that the only way to absorb any additional costs will be to lay off staff or throw in the towel and close the doors. Small businesses operate on fixed budgets, and just because the state adds new mandates, it does not mean that businesses get more income to pay for it all.

Even with our state coffers brimming with money, all they want to do is take, take, take. It’s obvious that in good times or bad, the tax and spend liberal solution is to treat Main Street like an ATM.

The message from Main Street couldn’t be more clear – stop heaping mandates and additional costs on us. Help us create jobs, support our community, and grow our businesses. Reduce regulations and reign in frivolous lawsuits.

Otherwise this ATM is going to have one message for Sacramento politicians – Overdrawn, No Funds Available.

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For more than 70 years, the National Federation of Independent Business has been the Voice of Small Business, taking the message from Main Street to the halls of Congress and all 50 state legislatures. NFIB annually surveys its members on state and federal issues vital to their survival as America’s economic engine and biggest creator of jobs. NFIB’s educational mission is to remind policymakers that small businesses are not smaller versions of bigger businesses; they have very different challenges and priorities. Learn more at www.NFIB.com/ca.

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