The Game Is Rigged Against Small Business 

A very long time ago, in the era of paper tax return forms for state business taxes, I happened to read, perhaps more thoroughly than before, some of the State of Washington tax forms I was filling out for my practice. I’m sure I had read this item more than once, but somehow it reached that level of consciousness which triggered action. 

Action meant calling a state tax entity. Such a call requires some significant thought-percolation before picking up the phone.

On that old original form and on the website forms now, I’m pretty sure, the Department of Revenue had and has a line suggesting the availability of a tax deduction for Research and Development expenditures.

I understand that I am not the Salk Institute. I get it. I am in full time private practice, but I’ve still managed to publish several professional papers and apply for a couple of patents. 

Based on that, I flatter myself by calling myself a clinical researcher. Given my self-flattery, and given a slow afternoon those years ago, why would I not call up the Washington State Department of Revenue and ask them about the deduction for Research and Development expenses? Maybe I could reduce my tax bill a bit. So, I called and asked.

The answer: “Well, that’s for companies like Boeing.”

My answer: “Could you send me the form to try to fill out anyway?”

His answer: “I guess so. What is your fax number?”

The signal arrived at our fax and the fax started spitting out paper. And spitting. And spitting. I barely had enough paper. I put a box on the floor to “collate” the arriving pages. I felt like Lucy in the wrapping chocolates episode of I love Lucy. That clip provides a pretty good picture of me trying to catch pages of the incoming tax form flying out of the fax and occasionally checking to make sure the fax machine itself wasn’t about to burst into flames.

As the incoming fax finally expired and as I looked at the stack of paper sent my way, I quickly calculated that I didn’t have time to read the form, let alone fill it out. No matter how much of a tax deduction I got, the time spent would represent a huge loss. If I paid myself minimum wage for the time spent in reading and filling it out, I would have drained my practice checking account. That all assumes I could have translated the form into my variety of English.

R and D tax deductions were for Boeing, not for me.

Also in that era, I got to the point that I could fill out state paper quarterly tax forms fairly efficiently and – I think – fairly accurately, in part by rote. Repetition of the actions each quarter meant I could usually click into memory and at least notice if an area I had filled out on prior forms was mistakenly left blank this quarter. That rote-enhanced form-filling ability got to be pretty useful. I’m not sure a lot of people have the same handle on the old adage “time is money” as a small businessman who does his own State of Washington tax forms. 

One day, I got a call at my office from the State Department of Revenue. Immediately my heart sank since the assumption always is I’ve done something wrong. Fortunately, my staff member told me they were only doing a survey. 

The seemingly nice young man on the other end of the line asked for input about the Department’s intent to update/upgrade/remodel the tax forms. I exploded all over him. Without screaming as such, I forcefully said “No! You don’t understand! I only have so much time. I do these forms by rote. Leave them alone! You’re making my life harder by changing everything!”

Then he said, again, very nicely and conversationally, “Maybe we need to do an advertising program to explain the new forms.” I went off like a rocket. At that time the state was running a huge deficit. I – OK, I screamed a little bit – responded “the state is $2 Billion in debt – Billion with a B – and you want to have an advertising program??”

We did part friends. The state changed their form, and I relearned, only to relearn again when they changed quarterly taxes to a web format. I survived. The state…. well, is the state.

In those two vignettes, I think we can piece together a great deal about the position of small businesses in the eyes of government. 

According to the Small Business Administration, a small business is any business with 500 or fewer employees. The Census Bureau says a small business is any business with between 100 and 1,500 employees and revenues up to $40 million. By those measures I don’t even rank as a micro-business. I’m a nano-business. It’s me and four employees.

Even though (possibly old statistics) 90 percent of new jobs and 85 percent of new patents come from small business, deductions for research are for the big guys. The guys with lobbyists. The guys with lobbyists who are flush with cash. The big guys dictate the tax deductions or “incentives” they want.

And the time and effort of a really-small businessman doesn’t matter. Big businesses have accounting departments. Until we get to actual April 15th tax season, I am my accounting department. I can’t dictate a deduction I want, and I can’t get the state to keep their old form because it’s easier for me. I hold no sway in the state. The state is only cognizant of me in my role of collecting and transferring tax money to the state. 

I understand my lack of position in the state. I wasn’t consulted by the governor before he stripped me of my rights for COVID. And, the state holds my license to practice. That is their stranglehold, which they used to intimidate me and other practitioners until late in the COVID repression. 

That repression of healthcare practices was aided by regular people – our patients – who squealed. Prior to COVID vaccines, no one forced you to go to the doctor or to participate in healthcare; unless, of course, you were displaying psychotic behaviors that were immediately dangerous for your well-being or the well-being of others. 

If the doctor frightens you or offends you, don’t go. Walk out. I had two people during COVID look at some printed pieces we had suggesting masks aren’t that great and they did that. The man shook his head and walked out. I don’t think he turned us in since we didn’t get a fourth strike. But, I respect his intellectual consistency that they walked. There’s no way to tell if they turned us in since; in the area of COVID squealing, you are not allowed to know who your accuser is and therefore not allowed to face your accuser. 

I continue to struggle to understand the response – as well as the squealing – of regular people to the shutdown tyranny and to the destruction of very small businesses brought to us by the COVID shutdown tyranny. The almost complete silence on the destruction suggests the prevalent attitude is “Whew, we made it through. Let’s move on. We need to move on.” 

In my office, very few people comment on small businesses being crushed. Those few who do comment can become animated, which I appreciate. 

Maybe the other people just haven’t noticed. 

Locally, a microbrewery failed; the owners talked to the newspaper about bad timing. A pizza parlor closed. A cafe was closed for two years. A well known, well-respected family physician sent out a letter to his patients that he couldn’t afford the forced COVID accommodations and shut down his practice. A one-of-a-kind multi-million dollar surplus store decided to sell everything and close rather than sell to another generation.

It’s my pure speculation, of course, that they could have sold a multi-million dollar business in a normal business environment. These are just what has come to my attention without any real detective work. 

“Oh, well. We need to move on.” 

“Oh, well, we need to move on” is an easy phrase when you’re not the one whose livelihood went up in smoke. Can not having skin in the game explain the shrugs and changes of subject? Have the majority of regular people just not noticed those closings?

Part of “Oh, well, we need to move on” can be explained by abject fear that is now replaced by great relief in having survived the unseen foe. Part can be explained by the desire to participate in the big effort to beat the unseen foe, requiring the sacrifice by all… just some of us are a bigger part of “sacrifice-by-all.” 

Part can be explained by the inability of the average person to stop events. That inability to stop events probably gets closer to why so few care, although it’s also a great excuse. I think empathy is dead, so in my view empathy would be unlikely to have promoted intervention in those seemingly unstoppable events.

A major factor in legitimizing “We need to move on” may be that governments and the media have been very, very successful at removing the humanity from business. That is, people don’t think of the owners of these businesses who have lost their dreams as well as their savings. They don’t think of the employees who lost their jobs. They don’t think of the penumbra of relatives, friends, former owners, and other individuals who financed those small businesses with personal savings. Businesses, big or small or nano either became or were confirmed as non-human entities, and as such, all businesses became entities easily held at a distance.

The public – justifiably during COVID but also actively encouraged by governments and the media – embraced the faceless entity Amazon (and others) as a way to survive. People couldn’t “go shopping” as in the past. Large businesses, chain stores, and online retailers embraced lockdowns, then placed the groceries in your trunk as you sat in the front seat of the car. And they wore gloves and a mask. And they made a ton of cash.

Those businesses were “essential.” Seeing humanity only happened when consumers were lucky enough to be watching through the window as the UPS driver dropped off the packages. That assumes they could tell it was a human behind the mask and gloves. (I told a student who shadowed me this past week that we are in a “people business.” Maybe that concept is dead.)

During COVID, small businesses lived the Kelo decision on a daily basis. In the Kelo decision, the Supreme Court said government was allowed to take property not just for “public use,” but for “public purpose” (see Thomas Sowell’s discussion in Intellectuals and Society, p.280). The alleged public – or governmental – purpose during the COVID tyranny was beating a virus.

My property includes the business activity of my practice, just as the owners of the closed microbrewery owned their business activity. That business activity was in the open and ready for the taking by government for the public purpose of beating a virus; beating a virus at my expense and at the expense of other very small businesses.

If it’s true that a million small businesses died during lockdowns, then the aggregated loss is in the billions of dollars just in the US. Why are there no headlines about this huge loss of capital? 

When large businesses see their stock price fall, that makes the news. And therein is the answer to the headline question. With small businesses, that penumbra of family, friends, and relatives lost the money, not stockholders. Loss of stock price means big investors and pension funds lose money. The media, and therefore the public – and governments – notice that. Individuals aren’t noticed.

Certainly for government, the media, and “essential” big businesses, very small businesses are just tinnitus – that annoying, ever-present, seemingly un-erasable internal “white noise.” You deal with the internal white noise by turning up the music so the ever-present background noise is not so noticeable that it can be ignored. Forcibly turning up everyone’s attention to scary and big and essential meant small, unessential and closed just weren’t and aren’t noticeable. 

Oh, well. Near as I can tell, no humans were involved, just businesses. So, it’s probably time to move on. Yeah, let’s move on.