Small Business Looks at Where Candidates Fall on Its Issues

The Wall Street Journal

McCain Seems to Be Favorite, but the Picture Isn't Quite That Simple

With the presidential campaign in full swing, the candidates will no doubt set their sights on the huge group of voters who own their own businesses. But winning their support will be a daunting task for Barack Obama and John McCain.

Rather than a monolithic voting bloc, the small-business community covers a vast swath of geography and ideology. At the same time, lobbyists and business owners are frustrated at the scarcity of details from the candidates on many small-business policies.

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"We'd like to see more specificity on almost everything. A lack of specificity breeds worries," says Todd Stottlemyer, president and chief executive of the National Federation of Independent Business, a lobbying group.

Healing the System

One area where nearly all small-business owners agree is health care: Three small-business lobbies -- the National Federation of Independent Business, the National Association for the Self Employed and the National Small Business Administration -- oppose a mandate that requires employers to cover their workers' health-insurance costs.

This is the one area where Sen. McCain would seem to have an edge. While Sen. Obama hasn't said he supports a mandate, he has said he plans to require all companies to offer a health-insurance plan or contribute to employee coverage. Under the plan, small businesses will not have to provide coverage; they will be offered a tax credit to encourage them to do so. But so far Sen. Obama hasn't specified just how small a company would have to be to qualify -- a key stipulation that small-business owners and lobbyists are waiting for. (Jason Furman, economic-policy director for Obama campaign, says, "We would work with the Treasury to design the appropriate threshold for defining a small business.")

Sen. Obama also says he'll initiate a national "exchange" -- a pooling system where small companies can spread risk across the pool like big businesses do among their employee base. Pooling, says Mr. Stottlemyer, would be an important step toward affordability.

Still, the lobbying groups aren't unified when it comes to the question of individual insurance mandates, which Sen. McCain opposes. Sen. Obama has said he would require parents to insure their children and would move to expand government coverage for the poor -- though he has stopped shy of calling for an individual mandate.

The National Small Business Administration supports an individual mandate, the National Association for the Self Employed opposes the idea, and the National Federation of Independent Business says it is studying the issue to try to see whether its members are in favor.

Sen. McCain has said he would allow for greater flexibility for individuals to buy health insurance from anywhere -- a proposal, like pooling, that the small-business community tends to support.

Out of Pocket

Another key issue: taxes. All three lobbying groups agree that the tax cuts initiated by President George W. Bush should be made permanent, a position largely shared by Sen. McCain. Sen. Obama plans to extend the cuts for households earning less than $250,000.

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Sen. McCain also plans to cut the top corporate tax rate to 25% from its current 35%, while Sen. Obama has said he plans to leave that rate at its current level. The small-business lobbies generally haven't taken a position on that issue, though National Association for the Self Employed Executive Director Kristie Darien points out that many of the group's members are sole proprietors and more affected by individual rates.

Sen. McCain has charged that Sen. Obama's plans to raise taxes on the wealthy -- households earning more than $250,000 annually -- would result in a burden on small-business owners. And he claims that Sen. Obama's tax proposal will stave off job growth, since increasing taxes would leave less money for other purposes that small businesses need, such as investing in technology or hiring.

But only a small percentage of small-business owners take home $250,000 per year, experts say. Only 1.4% of small-business owners would be affected, according to the Tax Policy Center, a joint venture of the Urban Institute and Brookings Institution.

Even so, while only a small percentage of small businesses may be affected by the increase, those that are affected are likely higher-growth companies, says Todd McCracken, president of the National Small Business Administration. "Those are the companies that fuel employment growth," he says. "Is it a small number? Yes. Is it therefore insignificant? The answer's no."

Other disagree. As a middle-class American, "I'm not getting the tax breaks [President] Bush has implemented," says Brandan Spradling, a Gilbert, Ariz., restaurant owner and Obama supporter. Even if her business were to take off and she earned much more money, "I feel like I should still pay taxes," she says.

Meanwhile, some small-business owners are simply listening for a commitment to their needs. "More important than any particular platform element is feeling that the candidate really understands small business and is committed to advancing it," says Keith Ashmus, a partner at Cleveland law firm Frantz Ward LLP and a board member at the National Small Business Administration. "I don't pick that up from either candidate."

Mr. Ashmus, a registered Democrat, hasn't decided whom he'll vote for.

Write to Simona Covel at simona.covel@wsj.com and Raymund Flandez at raymund.flandez@wsj.com

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