Entrex Shows Small Business Investing Produces Nearly 300% Increased Tax Base for Government While Reducing Unemployment
CHICAGO, Jan. 28, 2010 -- Entrex showed today, after President Obama’s State of the Union Address, that effective tax legislation promoting small business investing could produce nearly a 300% increased tax base when compared to public market short term capital gains tax rate -- while potentially reducing unemployment.
“This is simple stuff, from a small business perspective” says Stephen H. Watkins, CEO of Entrex and the Private Company Index. “Put $100,000 collectively in the public market and you’ll make 10% annually on average… without any effect on employment growth. But the government would get 39% of the gain in short term capital gains.”
“If you compare investing that same $100,000 into a small private company to hire one employee; the Government ends up with both a new personal income tax base - plus additional corporate tax base – while eliminating upwards of $7-8000 annually of unemployment benefits!”
“Having the Government support small business investing offers the government a net cash-flow benefit of nearly 500% when compared to traditional Wall Street investing” announced Watkins. “It’s time Congress started looking at practical tax solutions to provide a capital path for small business to hire the unemployed.”
Watkins, who testified last year at the request of United States Senator and Chairwoman Mary Landrieu (D-La) to for the United States Senate’s Committee on Small Business and Entrepreneurship, suggests that if Congress could develop a plan to promote small business investing; taxation receipts could increase and unemployment costs could decrease.
“At some point we have to stop harping on bank lending. Banks have justifiably been regulated out of risk based lending, which is certainly visible in the tighten credit markets. Unfortunately we’ve legislated the capital markets shut for smaller private businesses -- which certainly we wouldn’t expect to change anytime soon.”
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