What the State of the Union Meant for Small Business

In last night's State of the Union address, President Obama focused a lot of time discussing how to help revive the middle class, saying that it's the basic task of government to make sure that hard-working people can get ahead.

Now, according to Katie Vlietstra, director of government affairs at the National Association of the Self-Employed, twenty-two million of those hard-working people own a small business or are self employed. She discusses how she thought the President did last night and what is potentially positive or negative for small business in the President's new agenda.

So what do you think was the most important thing that President Obama said about small business last night?

Well, one of the things I thought he really allowed for some room on was comprehensive tax reform. As we all know, Chairman Camp of the Ways and Means Committee last year put together a path forward for both individual and comprehensive corporate tax reform and I think the President -- by signaling last night that he was willing to work with both House and Senate leaders on this comprehensive tax reform bill -- really gave Chairman Camp some cover, so we are really excited to see how this process works out in the House and the Senate -- and were encouraged by President Obama's words last night.

Now, going back to tax reform, do you think something is actually going to happen?

I think this is going to be a very tough issue. We have the pre-holiday deal that was made and then you have right now with sequestration, the budget deal. You have Democrats coming out and saying no more tax cuts. We need tax increases on the wealthiest 10%. But I think what Chairman Camp and hopefully what President Obama are looking at is that with an individual and a corporate tax reform overhaul, we are really going to get that leaner, easier tax code that is definitely going to benefit the middle class and will wholeheartedly benefit the 22 million self employed that don't need any more burdens when it comes to running their business and how they operate.

Talk to me a little bit about their burdens right now?

So most self employed are Schedule C filers which means they file their taxes four times a year. Now, I know most of us cringe when we have to rush to April 15th to file our taxes just once a year and so what I hope with come out of the House Ways and Means Committee and what President Obama will sign into law is a much easier tax process. Maybe we will not see the Schedule C filers go down from four to one but I think you're going to see something that's easier, that's going to allow them to click a couple of boxes, autofill in some numbers and then they're going to be done and that's what we are really looking for. We've seen the administration act when it comes to simplification of tax code. We was just saw with the simplified Home Office Deduction. So we think there are other ways when we are working together that we can lift the burden off of small businesses when it comes to tax issues.

"I hope that President Obama works closely with the House and the Senate to get [tax reform passed] because I honestly think reforming our tax code will unleash our economic power in the years to come,"

- Katie Vlietstra, Director of Gov't Affairs at NASE

Small businesses obviously make up so much of the economy, why do you think we've made it so difficult for them?

I think this is one of those things where whoever screams the loudest gets the most attention. I think small businesses are very dedicated, day in and day out, to running their businesses. They see, sometimes, how ineffective their leaders can be in Washington so they're almost dismissive of the opportunity that life can be made easier by being advocates for themselves, so that's how the National Association for the Self-Employed fills in and says, "No, your voice is really important, we need to get up there" because you see Fortune 500 companies yelling about their problems but the self employed are actually too busy running their businesses to be up here lobbying Congress. So we are trying to fill in that hole so they know that their voice are an important part of the dialogue going on.... And they have to be heard because when you look at the numbers and look at the economic growth it is within the self employed sector, so as we continue to go up to Capitol Hill, I think our voice is being heard and I think they're understanding that the business community is much bigger and actually much smaller, when you take in the self employed, and what legislative issues need to be addressed.

What do you think about lowering the corporate tax rate?

One of our biggest issues that we have is competitiveness. Our members are not necessarily impacted directly but I do think that lowering our corporate tax rate is actually a good mechanism for all businesses to see some return of investment back to the United States. There are a lot of entrepreneurs out there who want or have a very small business that they want to grow into being the next big thing. So lowering the corporate tax rate will definitely benefit those entrepreneurs who are looking to start their business in the U.S. and keep their business in the U.S.

What do you think about the idea of getting things back to being "Made in America"? Manufacturing hubs. Are you in favor?

I definitely think that the United States workforce, the manufacturing sector, is something that has unfortunately seen better days. And so I think as we're looking to figure how we expand our economic growth here, we have to look at manufacturing and the "Made in America" slogan as important and I think there is a ton of investment and opportunity here.

But do you think it's more than just a slogan? Do you think that manufacturing in the U.S. actually really come back full force?

I don't see why not. I think we really have to put our heads together. I think what's really great for small businesses is that you're going to have supply chain growth. So maybe our small business, self-employed individuals aren't actually assembling the car or the plow but they are going to be able to provide a product to that end result which will be amazing. And I think that our opportunities are limitless here. And moving forward, we are going to have to look at everything across the board, where we can grow in every single sector -- and move forward as a country.

What about raising the minimum wage? Do you think that could potentially hurt small businesses? 

This is something that we were not prepared for last night when President Obama announced a minimum wage increase from $7.25 to $9. So we are going to look at this very closely. Of course we think that Americans and our workforce should be paid a wage that allows them to live and prosper but this is of concern to us and we're going to go and look at the data and talk to our members to see what they say about it. We are going to make sure our members are comfortable with it and if they're not, we are going to make our voice heard on it.

Why were you surprised? Do you think this is really the time to be raising minimum wage?

I think my surprise was when we are talking about economic growth, clearly individuals having more money in their pocketbooks to spend helps. It helps them make those purchases to reinvest into their businesses. I just think I was a little bit more shocked about the leap of going from $7.25 to $9 and really, more than anything, this hasn't been a part of the conversation with respect to how do we help our economy and so that's why I think I was a little surprised when the President mentioned it last night.

Obviously, it could be a good thing for a lot of people. At the same time, it could potentially be hard for small businesses that are just trying to get by now....

Exactly. And I think what we really need to look at and where I am excited to talk to our members is the overall economic picture -- because not only do we have a proposal right now for a potential increase in the minimum wage but of course we all know that we have health care reform that will be fully enacted January 1st, 2014. So, we really want to take some time and talk to our members and say, "Let's open up your books. Let's talk about this. How will this impact you?"

Anything else that I missed that you thought was really significant last night?

I'm actually just very optimistic about this idea of true, comprehensive tax reform when it comes both to individual and corporate rates. I do hope that Chairman Camp is able be successful. I hope that President Obama works closely with the House and the Senate to get this done because I honestly think reforming our tax code will unleash our economic power in the years to come.