Survey Suggests Streamlining Regulations Over Cutting Taxes

For each of the past three years, small business owners throughout the United States have been surveyed to assess how 'friendly' their states are toward entrepreneurs and small firms. And each of those three years, Utah, Idaho and Texas have appeared in the top five. Those three states were joined by Virginia and Louisiana in receiving A+ ratings in the latest Small Business Friendliness Survey from and the Ewing Marion Kauffman Foundation. In contrast, small business owners have placed California and Rhode Island in the bottom five each year. Those two states and Illinois were the only ones to receive an "F" this year.  

So what kind of policy insights can be gleaned from that? Survey results indicate that ease of regulatory compliance is more important to entrepreneurs than tax rates. Two-thirds of respondents said they paid their “fair share” of taxes – that is, they felt like they were neither under-paying nor over-paying. But while they didn't worry too much about rates, they want the process of filing taxes to be simple.

“It is critical to the economic health of every city and state to create an entrepreneur-friendly environment,” said Dane Stangler, vice president of Research and Policy at the Kauffman Foundation. “Policymakers put themselves in the best position to encourage sustainable growth and long-term prosperity by listening to the voices of small business owners themselves.”

More than 12,000 entrepreneurs nationwide participated in this year’s survey which ranked 82 cities and most states on what makes a positive environment for small businesses.

“Creating a business climate that is welcoming to small, dynamic businesses is more important than ever, but rarely does anyone ask small business owners themselves about what makes for a pro-entrepreneur environment,” says Jon Lieber, chief economist of “Thousands of small business owners across the country told us that the keys to a pro-growth environment are ease of compliance with tax and regulatory systems and helpful training programs.”

Other findings include:

  • Small business owners who were aware of training programs offered by their government were significantly more likely to say their government was friendly to small business than those who weren’t. Awareness of training programs raised overall scores by 10 percent, while 76 percent of those who said they were aware of government-sponsored training programs for business owners ranked their local government as “somewhat” or “very supportive,” and only 8 percent of these said local government was unsupportive.
  • Only 19 percent of respondents said they were prepared for implementation of the Affordable Care Act.
  • Female entrepreneurs were more likely than male entrepreneurs to say that their state government was friendly to small business, while male entrepreneurs were more likely than female entrepreneurs to have a positive view on the outlook of their state economy.
  • Kentucky's grade was this year’s most improved, jumping from a B- to an A.
  • Colorado Springs (CO), Boise (ID) and Houston (TX) were the top three rated cities.
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