Monday, November 15, 2010

1099 repeal/ Dr Winslow Sargeant

On Firday, Senator Max Baucus introduced legislation to repeal the filing of 1099s on transactions over $600. It is not clear the details but it appears to be a full repeal. Small Business California and the National Small Business Association will be closely watching this and supporting full repeal.

As this email goes to Senator Feinstein and Senator Boxers office we ask whether the Senators will support this bill. I will let all of you know their responses.

Friday I met with Dr Winslow Sargeant head of SBA Office of Advocacy. We talked about the study of bank lending and he assured me this is in process. Dr Sargeant is going to take a lot of heat on this and therefore he will need the support of small businesses and associations representing small business from around the country.

We also talked about the 1099 issue and he clearly understands the problem.

Please see below article written by a past Small Business Advocate Tom Sullivan. Dr Sargeant has only been in his position a few months but he has already been in the forefront getting the voice of small business out. His regulatory study showing that small businesses pay significantly more than larger companies to comply with regulations will be extremely helpful when we talk to our legislators.

Scott Hauge
Small Business California
2311 Taraval Street
San Francisco, CA 94116

Small Business, Their Watchdog, and a New Congress

By Tom Sullivan

Small business is a hot topic in Washington. In September, Congress created a $30 billion small business lending program intended to jump-start business expansion. Republicans and Democrats then left Washington and campaigned on how their respective approaches would help small business. Finally, 80% of the pro small business candidates endorsed by the National Federation of Independent Business (NFIB) won their elections.

While candidates were telling voters how they would fight for small business, the Chief Counsel for Advocacy at the U.S. Small Business Administration (SBA) was already engaged in battle. Dr. Winslow Sargeant’s first 3-months as the federal government’s small business watchdog tells a story that the new Congress will certainly want to hear.

The Chief Counsel for Advocacy is responsible for advocating for small business, even when the beliefs of the small business community are at odds with the White House. The power to independently represent the views of entrepreneurs is manifested through the Office of Advocacy’s research papers and through public comments submitted to agencies on how regulations can be tailored to minimize costs on small firms while maximizing their regulatory intentions.

The day Dr. Winslow Sargeant was sworn in, he sent a letter to the U.S. Environmental Protection Agency (EPA) critical of how the agency is using the Clean Air Act to regulate small business. A few weeks later, Dr. Sargeant hosted an all-day conference on how agencies must carefully consider their impacts on small business before imposing federal mandates. President Obama’s top regulatory official, Cass Sunstein, reinforced the value of Dr. Sargeant’s work during his luncheon talk at the event.

On the same day as the Office of Advocacy’s conference, Dr. Sargeant released a report showing the disproportionate cost of regulation on small business. The research, conducted by Nicole Crain and W. Mark Crain, documents the shocking reality of our regulatory system. The total cost of complying with federal regulations is over $1.75 trillion. With small business shouldering costs 36% more than their larger business competitors, the burden amounts to $15,586 per household. That is more than the one and a half times what households pay for medical treatments. Most alarming, is the fact that in the four years studied, the cost of complying with federal regulations rose faster than the per-household cost of medical care.

The study on how federal mandates impact small business is impressive in itself. Since September, Dr. Sargeant’s research team issued three other reports, ranging from a summary of small business factoids, to a historical sketch of small business and economic development dating back to 1953. The study on how federal mandates impact small firms is the highlight of Dr. Sargeant’s short tenure. Not only did the Office of Advocacy release a report that shows, in stark terms, the depth of the regulatory problem, his team is doing something about it.

In his first 63 days as Chief Counsel, Dr. Sargeant signed 7 public comment letters that hold federal agencies accountable for their impact on small business. The letters, sent to EPA, the Department of Health and Human Services, the Occupational Safety and Health Administration, the Department of Education, and the Department of Labor amplify the concerns of small businesses that are struggling to keep up with rules and regulations flowing out of Washington.

Dr. Sargeant’s efforts show how his office is listening to small business and the elections last week served as a wake-up call to politicians who may not have heeded the same advice. Congressional committees will likely echo that wake-up call and demand that agencies search for ways to improve workplace safety, environmental protection, and access to credit without burying entrepreneurs under mountains of paperwork and regulatory costs. Those are the same demands coming from Dr. Winslow Sargeant and SBA’s Office of Advocacy.

The call for agencies to lighten the burden of federal mandates on small business is the consistent plea from SBA’s Office of Advocacy. That message becomes even more powerful when amplified by Congress. Dr. Winslow Sargeant’s first few months as Chief Counsel for Advocacy provide him with a track record that tells the new Congress they have a friend inside the federal government when it comes to helping small business.

Tom Sullivan is an attorney with the law firm of Nelson Mullins Riley & Scarborough where he runs the Small Business Coalition for Regulatory Relief. He served as Chief Counsel for Advocacy from 2002-2008.

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