The Big Issues for Small Concerns

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Tom, you have said the so-called death tax is an issue you're tracking. Governor Bush has vowed to abolish it. (At press time, the U.S. House of Representatives had voted to kill it and was waiting for the Senate vote.)

Schroeder: The death tax is probably the single most poorly understood and inconsistently applied tax we've got in this country. It's really a tax on success, which I think is contrary to what the U.S. is all about. I mean, we want people to develop businesses, then pay income taxes as they go along and earn income. Then suddenly, at their death, after they've built this big successful company, Uncle Sam wants to take a piece of it. Family heirs often lose these business legacies because of the high taxes. And most don't do enough estate planning and are totally unprepared.

Batterson: I've been going through this in my own estate planning right now, and it is quite a shock. The numbers that you're going to have to pay in taxes range from 37% to 55%.

Considering all the tax burdens, do you feel the government is at odds with the little guy?

Cooper: Sometimes, but it also supports us as well. My company wouldn't be here today if I didn't get grants from an SBA [Small Business Administration] program called the Small Business Innovation Research program. It helped me pay for R. and D. to build a prototype. I can certainly tell you from personal experience that a little bit of money can make a huge difference early in a company's history. And similarly, we had some leverage in an investment round from a State of Illinois venture-capital fund. These programs are invaluable.

We know there are some mixed views of the SBA here.

Suzenaar: Trying to get SBA funding is an excruciating challenge, especially if you are a service business and don't have the tangible assets the agency is looking for. I couldn't qualify; I had to get a bank loan. There needs to be more support staff at the SBA to help people like me get through the bureaucracy and red tape.

Hasty: It can be difficult getting through the maze, but over the years I got good results out of the SBA. It helped us diversify. Up until 1990, the defense industry accounted for 95% of our business. Then the SBA came out with a program that helped defense contractors like mine move into the private sector by providing low-interest loans.

Zigulich: I get chills when I hear others around this table say the government should come up with a scheme to help start-ups with their taxes. The last thing I want is more government intervention. I've got to a point that when I receive any mail from the government, I just put it in an envelope and send it to my accountant or my attorney. I don't even open it.

Hasty: I think the real role the government can have with small business is in the area of health care. Family coverage for our 95 employees is $7,000 a year each. The insurance companies claim that they need it because of the rising cost of health care. That may be true, but I think government can help control those costs. The expense is suffocating a lot of people.

Does everybody agree?

Suzenaar: I think it's an immediate concern, because to be competitive you have to provide health-care benefits even though you run a small company. And it's tough. I had an experience two years ago that demonstrates the point. One of our employees had a terminal illness and became eligible for insurance. But after the paperwork was submitted, we were advised by our insurance broker that the premiums might go up more than 300%. Obviously, such an increase could break a small company like mine.

Do you think the candidates are tackling the health-care issue?

Batterson: I think after Hillary Clinton got slaughtered over health care, everybody's just tiptoeing around all this stuff. I don't see any really hard, effective proposals that are going to change this system and make it work.

Recently Bush announced his New Initiative Plan, which proposed association health plans. These ahps would be offered through trade associations and have national bargaining power.

Batterson: It's really just more alphabet soup. Look, all I would need is a major medical plan that I could get at a reasonable cost. And then if my employees needed some other benefits to cover the hangnails, we could give them that in additional salary and compensation, and they could handle it. I think it could be really simple.

What about medical savings accounts? It's a way for you to put money aside, almost like an IRA, and then you use that money to buy the health care that you need. Is anyone using them?

Batterson: I'd like to switch our whole firm into medical savings accounts right now, because that's the closest thing I can find to major medical. But I can't, because a couple of people have pre-existing conditions. I'm afraid those conditions won't be covered if we make the switch, no matter what they tell us.