Optimism among small business owners has plummeted as Democrats race to raise taxes amid rising inflation, according to a new poll by a right-leaning advocacy group Friday.
The poll conducted for the Job Creators Network found that an index measuring optimism among small businesses declined to 59.4 in August, down from 63.5 in July. It was the lowest point in the four months that Republican pollsters John McLaughlin and Scott Rasmussen have been conducting the survey.
“Concerns among small business owners are mounting and it’s having a dramatic effect on how they view the future, which could impact hiring, wage growth, and the potential for business expansion as the economy weathers the lingering pandemic,” said Elaine Parker, president of the Job Creators Network Foundation. “And proposed government policies threaten to weaken the falling optimism further.”
Democrats have been previewing tax increases that they plan to impose to pay for the $3.5 trillion social-welfare spending spree that Congress is crafting. The Treasury Department has said the increases would spare 97% of small businesses.
But the Tax Foundation, a Washington right-leaning nonprofit, estimates that slightly more small businesses would be hit. Most impactful on small businesses, according to the foundation, are proposals to raise the top marginal tax rate for high-income earners, and to tax inherited assets like stocks and businesses of more than $1 million.
The declining optimism among business owners came even before Mr. Biden announced new requirements for workers to be vaccinated or tested weekly for the coronavirus. While the requirement affects companies with at least 100 employees, the government will force many small businesses to deal with finding time off for workers to get vaccinated or tested, Ms. Parker said.
She said small businesses owners’ hopes had risen earlier in the summer as normal life seemed to be returning during the pandemic.
“People went on vacations again. Hotels and flights were full. People were getting out and living again,” she said.
But since then, the Consumer Price Index rose by 0.9% in June and by 0.5% in July, at a pace that is a 13-year high on an annual basis.
“That impacts feelings about hiring in the future,” she said.
At the same time, rising COVID-19 infections are raising fears of more restrictions on small businesses, like those that “hit them on the chin” last year, Ms. Parker said.
“It’s like a bizarro world,” she said. “The Biden administration said they are not affecting small businesses, but they absolutely are.”
Among the survey’s other findings:
— The percentage of small businesses that described their financial condition as good or excellent declined to 57% in August, down from 60% the previous month.
— The percentage of companies expecting their financial condition to improve in the next three months fell to 53% in August, down from 62% in July.
The survey of 500 small business owners nationally from Aug. 1-19 had a margin of error of plus/minus 4.4%.