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Small businesses at the core of job growth

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					                     Small businesses at the core of job growth

Small businesses are a source of innovation and risk-taking that is important to economic growth.
They're the testing ground for new products, new technologies, new internal forms of organisation
and new locations. Others follow their mistakes, leading to general increases in productivity,
according to a report by the U.S. Department of the Treasury.

Today, small businesses supply the bulk of American jobs:

 Small businesses employ over half the labour force and create approximately 7 out of 10 new
jobs.

 Over the past decade, between 60 per cent and 75 per cent of annual employment growth has
come from small businesses.

 By some estimates, small businesses generate 52 per cent of the gross domestic product
(GDP).

 Patents by small firms were cited in subsequent patent applications 28 per cent more often
than patents by larger firms.

As such, lawmakers should be sensitive to the effects of taxation on small businesses. For
example, lower tax rates encourage small businesses to hire more workers and pay them higher
wages. They also encourage entrepreneurs to invest more and increase the pace at which firms
grow, says Treasury.

Source: Fact Sheet: The Tax Burden on Investment and Entrepreneurship, U.S. Department of
the Treasury, Office of Tax Analysis, March 11, 2005.

For text:
http://www.freemarketfoundation.com/”http://www.taxreformpanel.gov/meetings/pdf/factsheet_sav
ings_investment.pdf”

For more on Tax Burden on Small Businesses:
http://www.freemarketfoundation.com/”http://www.ncpa.org/iss/tax/”

FMF Policy Bulletin/ 19 April 2005

				
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