For far too long we’ve seen federal and state governments enacting shortsighted regulations and tax increases onto our business community.
By Marc Ang, Special to CalMatters
Marc Ang is a community organizer in Southern California and the founder of Asian Industry B2B.
Southern California is known for its diverse culture, picturesque views of the Pacific, theme parks like Disney and Hollywood. However, what’s often overlooked is the struggling business environment that has plagued our communities and economy for years.
When I first founded the Asian Industry B2B I wanted to create a tight knit group of business and community leaders of Asian descent to celebrate our cultural values and help retain our unique Asian American identity by developing pro-business and pro-family initiatives that would impact our local communities.
In a post-COVID-19 pandemic world, small businesses and the working class were hit the hardest. This is evidenced by the rapid rise of the cost of gas and subsequently the price of everyday necessities like food. With a strong portion of our membership in the supply chain space, I have seen the disastrous effect of rising taxes and bad policy.
It’s no secret that our country and state’s economy are in a bad place. That is especially true for Southern California’s Asian business community, which has seen the likes of nail salons, restaurants and other local family-owned stores face difficult financial decisions, resulting in many closing or picking up and leaving to states like Texas, which have a much friendlier business climate.
For far too long we’ve seen both our federal and state governments placing a priority on enacting shortsighted regulations and tax increases onto our business community and the workforce they employ. While some may argue these are needed to fund our government or keep us safe or the importance of preserving the environment, we need to find a better balance. Businesses should not be crippled in the process and making a “profit” should not be an ugly word, especially for the small businesses and entrepreneurs who may be living on instant ramen for decades before seeing a profit.
A perfect example of this is the corporate tax hikes that some of our members of Congress are pushing to enact. For years we’ve heard people asking for our nation’s biggest businesses to pay their fair share in taxes, but many of us often don’t realize what an increase in corporate taxes means. Studies show that workers tend to bear between 75% to 100% of the financial windfall of an increase in the corporate tax rate in the form of stagnating wages and job growth. Decisions like this mean we are inadvertently impacting members of our own community and strangling innovative entrepreneurs.
Couple an increase in corporate taxes with the difficulties we are already seeing with small businesses trying to find workers and it makes it nearly impossible for these business owners to make a living while running them. Small business owners are the first to put back and into their business and hire more help, thereby creating jobs.
Arguably, no industry has been impacted more by the global pandemic and inflation than the restaurant industry, as it has faced additional health regulations, a revolving door of open today but forced to close tomorrow, a shortage of workers and a weakened supply chain which is making it difficult for these businesses to operate.
However, the restaurant industry isn’t the only one that could be facing these issues, as Washington policymakers are trying to push through an increase in the Global Intangible Low Tax Income or GILTI rate on American multinational businesses to help pay for additional social spending.
An increase in the GILTI rate from 10.5% to 15% could cost our American companies nearly $10 billion in lost economic activity in global industries like technology and international trade. A decision like this could be a fatal blow.
Trying to fix these economic challenges won’t happen overnight. However, now is the time for us to band together as Californians to support one another by pushing back against unneeded taxes and regulations. Let’s not make the problem worse.