As far as the 2007 legislative session goes, I feel I’ve done a pretty poor job for small business thus far.

Last summer and fall, I attended a lot of meetings and hearings as a small business spokesman, and fought tooth and nail for small business interests, especially on tax issues.  I’m talking about small businesses as a whole, not my own small businesses.  

The Governor is just as anxious this year to stimulate Kansas business as she was last year, and I was one of the business people her staff consulted on how to do that.  I’m afraid I did a very poor job of selling the benefits of stimulating small businesses, even though small lbusinesses employ 54% of the private work force in the state.

Last year “the business community”, meaning the Kansas Chamber, National Federation of Independent Business, Wichita Independent Business Association, and many of the other business lobbyists and associations, created a business agenda for the 2006 session.  It included, in order of priority:

1. Business Machinery & Equipment (BM&E) Property Tax phase-out
2. Franchise Tax phase-out
3. Kansas Estate Tax phase-out

The top priority for small businesses was the Franchise Tax phase-out.

Late in the session, the chief lobbyist for Kansas Chamber came to me with a proposal.  If small business would give up the Franchise Tax phase-out effort until this year, “the business community” could win approval of both the BM&E and the Estate Tax phase-outs.  The Franchise Tax phase-out would be top priority for “the business community” for 2007.  I agreed.  The BM&E and Estate Tax phase-outs were passed and signed by the Governor.

Last fall, when members of “the business community” were invited to advise the Governor for 2007, the Chamber’s chief lobbyist was not there, although the Chamber’s current and immediate past Chairman were.  I was there, along with two other small business people, but I was the only NFIB or WIBA member present.  Early on, I reminded the group of the commitment to make the Franchise Tax phase-out the top priority for this year. 

After receiving advice from “the business community”, the Governor announced a plan that would:

1. Provide $29 million per year in reductions in corporate income taxes.  79% of this goes to 400 C-corporations (95% to 2000 C-corporations).  None of this goes to S-corporations, proprietorships, or partnerships -- the main small business tax forms. 

2. Preserve $20-30 million per year in business “incentives”, at least 95% of which go to the largest of Kansas corporations. 

3. Provide $7.3 million per year in Franchise Tax relief to small businesses, but continue the remaining $37 million.  About $12 million of that $37 million is paid by small businesses, while $25 million is paid by big businesses.  The $12 million is very important to small businesses, and the $25 million in savings to big business is very close to the savings they would get from the corporate income tax break.      
 
In a letter to the Topeka Capital-Journal last Monday, the Chamber’s chief lobbyist wrote, “…The Kansas Chamber supports proposals now being discussed in the Legislature to reduce the tax burden on Kansas businesses that provide the jobs that fuel our economy.  Businesses all across the state call on the Legislature and the governor to help make Kansas the best state in America to do business by reducing corporate income and unemployment compensation taxes, along with repealing the franchise tax.”

The way I read it, we have a new “business agenda”, and repealing the franchise tax is last on the list. 

Another failure of mine was to convince the Chamber to back a fair, across-the-board reduction in unemployment taxes.  The unemployment tax system adjusts each employer’s rates to make sure they are paying in their share.  It works very fairly for employers showing positive balances in their lifetime accounts.   

Instead of an across-the-board design, the Chamber devised and is promoting a scheme which favors some positive-balance employers at the expense of others.  It rewards big businesses at the expense of small businesses.  It rewards older businesses at the expense of newer businesses.  It rewards businesses that have shrunk in size at the expense of those who have grown in size.  It rewards businesses that are paying in $5 per year per employee at the expense of those who are paying in $384 per year per employee.  

In the past week I’ve taken a considerable amount of abuse from “the business community” (this does not include NFIB or WIBA) about my stances, and about my attitude in arguing them:  I’m not professional.  I’m not diplomatic.  I’m loud.  I’m not a team player.  I’m acting only in my own interest.  

OK.  I freely admit to the first three.  But I didn’t sign on to be the water boy for big business.  I am a small business lobbyist, an unpaid volunteer who works against my own interests if it benefits most other small businesses.  If you want me on “the business community” team, then treat me with honesty and live up to the spirit of your deals.   

Finally, I’ve got many years of experience with the old tactic of sending a message boy to make deals then denying that the message boy got it right, or that he didn’t have the authority to make the deal, or that you didn’t know what he was doing.  Give me a break.

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Kenneth Daniel ( This email address is being protected from spam bots, you need Javascript enabled to view it ) is a Topeka small business owner and free-lance writer.  He is publisher of www.kssmallbiz.com, a website dedicated to Kansas small business.

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