Killing the Job Goose: New Company Formation

Want to understand why job growth is slowing down? Almost all of net new jobs come from businesses that are less than ten years old, but the number of new companies being formed is declining. It is harder to start a new company today. Virtually impossible to take one public with all the new federal regulatory requirements (e.g. Sarbanes-Oxley). You can't even open a lemonade stand legally in under 60 days in most cities.  New businesses are the goose that lays the golden eggs, and we're strangling the goose.

Punishing Small Business Growth

President Obama proposes to raise taxes on businesses that earn $200,000 or more annually and file individual tax returns. He claims that there aren't that many businesses that will be affected, but this is simply not true. There are 1.2MM businesses in the US that would be subject to the tax increase, and these businesses account for over 90% of the income produced in this category -- i.e. they're exactly those who could create the most jobs.









Now in reality, the President is probably not this dumb. He knows this hasn't a chance of passing through Congress (even when Democrats controlled both Houses of Congress, it failed), and it serves to distract people from the important economic issues he'd rather not talk about. Still, it's disturbing that this sort of thing -- even if it's just rhetoric -- gets taken seriously by some people.