Survey: Small business groups view incentives as biased, ineffective

A new report from incentives watchdog Good Jobs First finds that small business groups have unfavorable views toward economic development incentives.

In Search of a Level Playing Field: What Leaders of Small Business Organizations Think About Economic Development Incentives” surveyed 41 leaders of small business organizations representing 24,000 member businesses. The survey found respondents believe that state incentives favor big businesses; that states are overspending on large, single deals; and that incentives don’t meet small business needs.

More specifically, the survey found that:

  • 92 percent believe incentives are biased toward large businesses.
  • 85 percent believe that incentives don’t address the needs of small businesses seeking to grow.
  • 72 percent don’t believe incentive policies are effective in promoting economic growth.
  • 87 percent say that small business interests in economic development issues are not effectively represented in their state’s capital.
  • 62 percent said traditional incentives (like tax breaks) are less valuable to small businesses than other forms of assistance.

Many of those surveyed didn’t oppose incentives on principle, but pointed out that incentive policies are either useless to the small businesses they represent or disproportionately benefit large companies.

When asked what states can do to better help small businesses, the overwhelming response was to improve access to capital. Specifically, those surveyed said that direct lending, linking deposits in community banks, and legislation allowing crowdfunding and tax incentives for non-accredited investors would be the best ways to help small businesses grow.

The survey also found that most small business groups play a small role in state tax and budget advocacy. Most said they want to engage more in these debates but lack the staff and resources to do so.

 

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