Schools and Small Business Need Each Other

kssmallbiz.com ^ | July, 17 2002 | By Kenneth Daniel

[jonefab]

K-12 education can't be helped by harming small business, at least not for long. When today's students go into the workforce, 15% of them will work for government. 36% will work for big business. And 49% will own or work in a small business. Cannibalizing small business will eliminate the very jobs students hope to fill. Those same percentages hold for the families of teachers-half of family members work in a small business. Conversely, half of students are the children of small business owners and employees who want those children to have an excellent education.

The 2002 Kansas Legislature made smokers and small businesses the main targets of the largest tax increase in state history. While big businesses received new subsidies or escaped virtually unscathed, small businesses got hit with heavy increases in franchise taxes, software taxes, inheritance taxes, sales taxes, fuel taxes, and more.

Thanks to tax breaks, direct and indirect subsidies, and outright corporate welfare, big business contributes only a tiny fraction of the nearly $10 billion per year in state revenues. Corporate income taxes for 2002 were less than 1% of state tax revenues, and even a significant portion of those were paid by small businesses. Sales tax and property tax breaks are overwhelmingly given to big business and not small business.

In recent years Kansas government has been awash in money. While the stock market was booming, capital gains provided a lot of money. So did the corporate income taxes paid by the large corporations. We now know that those corporate income taxes were on phantom revenue in many cases. Now that some of the corporate fraud has been discovered, not only have those phantom revenues disappeared, but the losses they concealed are being used to offset current and future taxes. Very little in state income tax is coming in from big corporations.

For now, as far as business taxes are concerned, that leaves small business, which has been paying far more than its fair share all along. Since big business can't be relied on, there is a great temptation to load an even greater burden on small business. That is exactly the opposite of time-proven sound economics.

It is not smart to pick the pockets of K-12's only stable and reliable source of current and future revenue. It won't help to "invest" in schools if the businesses that will hire and support those students don't have any money to invest in growth to provide jobs for them when they graduate.

K-12 needs to tighten its belt and allow the economy to recover. There is room for belt tightening. 47 other states spend a higher percentage of school funds in the classroom than does Kansas. Furthermore, many districts are awash in money but have it hidden in numerous "funds". Topeka Public Schools, for instance, has about 1/3 of a year's budget stashed in 138 separate "funds".

If Kansas schools will work hard to make Kansas a state that gets the most money to the classroom instead of the least, and if they will adopt straightforward and honest budgeting, we can buy a couple of years to allow the economy to recover without killing off the very small businesses that are its lifeblood.

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Copyright © 2002 Kenneth L. Daniel

(Kenneth Daniel is the publisher of www.kssmallbiz.com, a website dedicated to Kansas small business. He is C.E.O. of Midway Wholesale of Topeka, a small business he founded in 1970, and is the volunteer Chairman of NFIB Kansas, the largest business association in Kansas, www.nfib.com.)

[elbucko]

The Democrats don't and won't believe the fact that small business provides almost half of all jobs after high school. The Democrats do not believe in small business at all.

[jonefab]

To tell you the truth, I don't think most republicans do either. This might sound strange on the surface but you look at what regulations are doing to small business's in rural communities, and you will see a trend of the Walmart's, Dillions, and their relationship with the IBP's Conagri you take your pick.

Communities vie for the "privilege" of bringing these multinationals in, but in the end they pay a lot of low paying jobs, ruin the competition and take the profit out of the communities.

In short they have huge market power that buys politicians and makes land owners, surfs on their on land.

With the passage of the HAACP requirements on the packing industry, it has driven 3/4 of the small locker plants out of business. They were never the problem but after the big packer saw that the legislation would pass, they lobbied for provisions to put these mom and pops out of the picture.