NCPA - National Center for Policy Analysis

Behold The Power Of Small Businesses

February 21, 2002

Economists have long been aware that small firms generate by far more jobs than large corporations do.

Here are a few facts that illustrate the dramatic impact small businesses exert on jobs and growth:

  • Government data show that three out of every four net new jobs are in small businesses.
  • Small firms represent 99.7 percent of all employers -- and they employ 53 percent of the private work force.
  • They are responsible for 47 percent of all sales in the nation -- and are responsible for 51 percent of private sector output.
  • Small businesses are responsible for 55 percent of innovations -- and represent 96 percent of all U.S. exporters.

Given such a strategic role for small businesses in the U.S. economy, a proposal to grant them tax relief in their early years has been suggested as a form of economic stimulus by Investor's Business Daily Chairman William O'Neil.

Specifically, his plan would grant four years of tax relief to any American who started up a business in the next three years. In the first two years, the business would be tax free. In the next two years, the tax would be half the corporate rate.

Source: Editorial, "Economic Start-Up," Investor's Business Daily, February, 21, 2002.

 

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