Guest opinion: Utah Legislature got it right for small businesses
The recent release of the National Federation of Independent Business’ survey of its small-business-owning membership showed continued concern along America’s Main Streets.
- 51% said supply chain disruptions are having a significant impact on their business.
- 44% said they have raised their selling prices 10% or more.
- 42% are experiencing moderate to significant staffing shortages.
All of NFIB’s research are national snapshots not broken down by state. But, I believe if it was you would see very different numbers reflected in Utah. The condition of the small-business economy is in a lot better shape in Utah’s compared to other parts of the nation, and it’s going to improve at an even faster rate this year thanks to positive actions taken by the Utah State Legislature during the 2022 session.
First and foremost is the passage of Senate Bill 59, which lowers the state income tax rate from 4.95% to 4.85%. The legislation swiftly passed the Legislature and was signed into law by Gov. Spencer Cox. Of the 75 issues ranked by NFIB’s Small Business Problems & Priorities report, state taxes on business income always ranks in the top 10. In true Utah business-friendly fashion, SB 59 will allow small-business owners to keep more of the money they earn.
Second is the increased exemptions in the tangible personal property tax (TPPT) contained in Senate Bill 93. People often forget, or never knew, that in addition to the property taxes paid on the land and structure a business sits on, everything within that structure that can be moved and touched — such as office furniture, equipment, file cabinets, etc. — is also taxed. The time-consuming calculation of figuring out the depreciation of those possessions and the negligible revenues it yields government are two reasons seven states have eliminated their TPPT altogether. Utah has taken what could be called a “bit by bit” approach to this tax, but this year’s legislation all but ends the practice of taxing inputs and that is a huge win for small business.
A third beneficial thing the Legislature did, with passage of Senate Bill 212, is create a Manufacturing Modernization Grant Program within the Governor’s Office of Economic Opportunity and provide $10 million in initial funding. The program will provide an opportunity for small business manufacturers to apply for grants to help them automate processes and bring offshore manufacturing processes back to Utah. We fully expect this grant program to receive significant interest from Utah small businesses and hope the Legislature will be ready to put more funding toward it in the future.
Freeing small-business owners from spending hours on compliance paperwork so they can help out on the shop floor or meet with job applicants is what House Bill 252 does. The bill increases from 15 to 150 the number of employees a private employer can have before they must use the status verification system (E-Verify) for a new hire. Most employers have never been comfortable with their enforcement role on what many view as a federal immigration issue. HB 252 allows small business owners to spend less time on paperwork and more on what they do best: revving the engine of the American economy.
The fifth and final big accomplishment for small business was the passage of Senate Bill 95, which makes it clear that an employer does not have liability for negligently hiring an employee who has been previously convicted of an offense. A lawsuit is no small matter for small business. Hundreds of small-business owners are forced to close every year because of the cost of defending themselves in court, often against frivolous lawsuits. Utah led the nation with the first law holding businesses out of harm’s way from unfair COVID lawsuits. SB 95 is another example of Utah’s willingness to help take some of the risk of frivolous lawsuits away from small businesses.
There is a reason Utah consistently ranks near the top of the best places to do business. Our legislature understands that the engine of the state economy is small business, and small business depends on limited regulation and low taxes. Our legislature deserves credit for once again proving they understand the importance of small businesses to the Utah economy, and the actions taken this year will help Utah remain an economic leader in our nation.
Casey Hill is Utah state director for the National Federation of Independent Business.