“since the majority of all jobs created in the US are from small business?”
Isn’t this because of targeted tax cuts? Tax cuts that keep small businesses out of all the nasty taxes and regulations that big companies have to comply with?
It used to be that all American businesses created jobs.
No, it is because large companies become ossified and more static over time. Their ability to rapidly respond to growth in sectors/markets is hampered by their very size and ponderous management structure. While they might have thousands or 10’s of thousands of employees, the
Small companies respond to economic conditions much more quickly, have lower overheads and more rapidly deploy capital into niches in the economy than large companies.
As for small businesses avoiding taxation: not so. There’s a large barrier to entry to any business employer at the very first employee hired. There are regulations that small businesses do not need to comply with that large companies do (usually with regards to affirmative action reporting and things of that nature), but small companies must file all the taxation of larger companies.
The difference in tax complexity of small vs. large companies has much less to do with how many employees a company has and much more to do with their structure. A larger company is typically a C-corporation, while a smaller company is a S-corporation, LLC, sole proprietorship or partnership - ie, pass-through organizations. The large companies are C-corps because they chose that structure in order to take the company public. There’s no requirement that a company employing 10,000 people be a C-corp instead of a S-corp or LLC.
The C-corp’s filing is more complicated by far, but the S-corp or LLC is paying plenty of taxes - because of the pass-through nature of these structures, the taxes are paid on the shareholders’/partners’ 1040s, rather than on a C-corp’s tax return. The employment costs (FICA, Medicare, etc) are imposed on the small business just the same as on a larger business. The larger business is required to electronically file the withholdings for the payroll deductions, while the small company (payroll < 50 employees) can still file the withholding on paper with the paper coupons at any bank.
A relatively small change in the business tax law would allow large benefits to small companies. Two examples:
1. Allow all small companies to deduct medical insurance costs for owners as well as employees. Sole prop. firms like farms and ranches have been able to deduct their own medical insurance for quite a while; it would be nice to give this tax treatment to all sole prop. businesses.
2. Increase the Section 179 expense deduction to $250K permanently going forward, simplify the capital asset depreciation schedules, allow expensing of computer/office equipment up to some limit, provide more rapid depreciation of autos used in businesses, etc.