Today's report on small business optimism from the National Federation of Independent Businesses showed that overall optimism increased two points to 93.4, which was better than expected (92.5). Within each month's report on small business, respondents are also asked what 'problem' makes them the least optimistic. For several years now, the biggest problem for businesses have been government related and that continued to be the case in March
As shown in the table to the right, the top two problems facing small businesses are Government Requirements & Red Tape (21%) and Taxes, which also received 21% of the vote. While Red Tape was unchanged from February, Taxes saw the largest increase of any category. This increase was no doubt due to the fact that many small business owners started getting their tax returns which likely showed big increases in liabilities. At the same time as government is becoming a bigger problem, worries over revenues are diminishing.
The chart below compares the combined percentage of small businesses that cite Taxes and/or Government Regulations as the number one problem they face to the problem of Poor Sales. As shown, the gap between 'Government' and Poor Sales is near record levels. At a current level of 42, the 'Government' problem is now three times higher than Poor Sales.
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