NFIB Survey: Health Insurance, Regulations, and Federal Taxes Top Concerns for Small Business Owners

Tom Scott
CA Executive Director, National Federation of Independent Business

The National Federation of Independent Business (NFIB)/California released its quadrennial California Problems and Priorities Survey in conjunction with the NFIB national Problems and Priorities Survey, according to which small business owners list the cost of health insurance, government regulations, and high federal taxes as their top three concerns.

“Many Americans are frustrated by the federal government’s failure to solve problems. Small business owners are frustrated by the problems that the federal government creates,” said NFIB President and CEO Juanita Duggan. “All of the top problems for small businesses relate directly to excessive federal regulation and taxation.”

The NFIB survey asks small business owners to weigh 75 issues on a scale of 1 (a critical problem) to 7 (not a problem). Then it ranks the issues from top to bottom by their average score. According to the data, 52 percent of small business owners rank the “cost of health insurance” as a critical problem. That figure is virtually unchanged from four years ago.

Compared to the national trend, California paints an even uglier picture for small businesses. Three problems California small business owners rank much higher than those in other areas of the United States are family/sick leave mandates;minimum wage laws; and hiring/firing employment regulations.

This survey of our membership unfortunately reflects what we already know about the small business climate here in California. High taxes, complex regulations, and onerous mandates make this state one of the most hostile for small business owners to start a business and create good-paying jobs for Californians.

Below are the California-specific top 10 problems for small business:

1. Cost of Health Insurance
2. Unreasonable Government Regulations
3. Federal Taxes on Business Income
4. State Taxes on Business Income
5. Workers’ Compensation
6. Uncertainty over Economic Conditions
7. Tax Complexity
8. Uncertainty over Government Actions
9. State/Local Paperwork
10. Frequent Changes in Federal Tax Laws and Rules

Nationally, more than a third of small business owners (33 percent) identified “unreasonable government regulations” as a critical problem, placing it second in the rankings, up from the fifth position in 2012.

Tax-related issues represent 5 of top 10 most serious problems for small business owners. Nearly a third (29 percent) say “federal taxes on business income” is their biggest headache. Many others identify: “tax complexity; frequent changes in the tax code; property taxes; and state taxes on business income” as their top concerns.

The biggest change in the survey from previous years is “locating qualified employees.” In 2012, finding good workers ranked 32ndin the survey. This year it’s a serious problem for 12 percent of small business owners, placing it in the top 10. That could indicate a tight labor market, which is good news for workers who can command higher pay and better benefits. Businesses that can’t find good workers are at a disadvantage. Small firms can’t raise prices or increase sales to support higher labor costs.

Some serious problems in 2012 moved down in the rankings this year. In the last survey, for example, the “cost of natural gas” was the third worst problem. It tumbled this year to 34th place. “Electricity costs,” which ranked 12 in the last survey, dropped 7 places this year to 19.

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