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Obama vs. Romney: Where Do They Stand on Small Businesses Issues?

The upcoming U.S. elections are getting closer by the minute, and the presidential race is starting to heat up. Economic issues are standing front and center in this race, and it seems that Americans today are single-issue voters with only the economy’s growth in mind.

Obama is definitely the underdog when it comes to the economy, since he doesn’t really have any economic experience prior to his becoming a president. Romney, on the other hand, was one of the founding members of equity management company Bain Capital, and has worked in financial and consulting firms all his life.

I wanted to outline where each of them stands on the on small-businesses issues. Romney has already published a detailed economic doctrine in writing; although, you need to take whatever presidential candidates say with a grain of salt. Obama already has one presidency term under his belt, so in order to understand what he thinks about promoting small-business growth, reviewing his actions will be the best indication. Here are some concerns small business owners are faced with, and how they will be dealt with by the two candidates:

Regulation: Governmental regulations are necessary, there is no doubt about that, but a recent survey proves they affect entrepreneurs much harder than large corporations. The survey shows that in order to comply with federal and state regulations, small businesses pay almost $3,000 more per employee than big companies do. In dealing with federal regulation, Obama ordered federal agencies to review all small-businesses regulations and cancel the ones that are unnecessary; he also approved 5% fewer regulations during his term in comparison to Bush. Furthermore, before regulations were approved, he instructed the relevant department to check how they would affect small businesses.

As for Romney, in his financial plan he states that he will reform the financial regulations that are included in the Dodd-Frank Act (aka the Wall Street Reform and Consumer Protection Act) and cancel all of Obama’s excessive environmental regulation that limits economic activities. He will allow only 10 regulations per governmental agency and, in order for each regulation to be approved, it will have to return the costs it imposes in social benefits.

Taxes: Unlike big corporations that pay only corporate tax on their earnings, small business owners are forced to pay more taxes. They are forced to include their business earnings on their personal tax returns, and because individual tax rates are higher, they pay more taxes. Romney intends to make a 20% cut in the marginal tax rate, which will make it so the highest tax bracket for individuals will be 28%, instead of 35% today. However, large corporations will still be taxed only 25% under his plan.

Obama plans to implement a tax reform that will give small business owners a net tax cut, allow small business owners to expense up to $1 million of investments, and permit cash accounting on businesses with up to $10 million in gross receipts. Also, small business owners who increase hiring and investment will enjoy large tax cuts.

Health Care: Many small-business owners are struggling to find an affordable and comprehensive health care plan for them and their employees. Obama’s Patient Protection and Affordable Care Act, also known as Obamacare, attempts to fix this problem. The act, which is now being reviewed by the Supreme Court, requires individuals who are not covered by an employer- or government-sponsored insurance plan to maintain minimal essential health insurance coverage.

By 2014, the government will subsidize up to 50% of the premiums’ costs for small businesses, and provide small-business owners and employees with tools to lower the administrative costs of health care plans and avoid price increases on premiums. Romney does not offer any healthcare reform, other than repealing Obamacare on his first day in office.

Contracting: Federal law calls for 23% of all money invested in government contracts to go to small businesses. Moreover, large companies that are awarded a contract will sometimes commit to subcontracting some of it to small businesses, in what is called “bundling.” Unfortunately, most of the time, small businesses receive less contracting money than the law requires, and face extensive bureaucracy and fraud when trying to receive subcontracts. Another obstacle for small businesses is that the law favors contractors that use union labor.

Romney plans to cancel Obama’s executive order that requires agencies to use union workers for large-scale projects. In order to allow potential contractors to bid more competitively, he intends to revoke the Davis-Bacon Act—a law that requires contractors to pay their employees prevailing wages while they work on public projects.

Under Obama, 32% of contracting dollars went to small businesses in 2011. He also strengthened the regulation on small-business contracting, and improved government outreach to small-business owners. He also implemented a new system to reduce the time it takes small businesses to receive payments from the government.

Which candidate is better for small business owners? It’s up to you to decide, but so far it seems that Romney is in the lead. A recent poll shows that 49% of small-business owners intend to vote for him in the upcoming election, and only 32% are planning to vote for Obama. Tables may turn; now we just have to wait and see.

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