Watch C-SPAN for more than 30 minutes, and you’ll likely see more than one policymaker sing the praises of one of America’s most celebrated groups: small business owners. And with good reason—entrepreneurship is a key foundation of American economic life, and dynamic, growing companies account for 70 percent of new job creation.
Yet the realities of running a small business are often quite removed from the noble ideals of our political discourse. Small businesses—especially sole proprietorships and businesses with few employees like wedding photographers, roofers, house cleaners, and movers—are frequently overwhelmed and disadvantaged by the consequences of poor public policy choices that affect their livelihoods.
Thumbtack is in business to help these entrepreneurs connect with customers and thrive in their local communities. That’s why—for the third year in a row—we’ve partnered with the Kauffman Foundation to ask small business owners nationwide what they thought made for a friendly state and local government.
We asked business users of Thumbtack’s website to fill out a short survey asking them how difficult or easy it was to do business in their city or state, and we used those responses to grade 82 cities and nearly every state along 11 different metrics. (Idaho, Texas, Utah, and Virginia, for example, earned an overall friendliness grade of A+, while California, Illinois, and Rhode Island scored an F.) We received nearly 13,000 responses. and the insights we learned were frequently surprising—and potentially quite useful to policymakers.
Here are the three things that small businesses told us made for a “friendly” state and local government:
1. Small businesses worry less about the amount of taxes they pay than about how hard it is to pay them.
Two thirds of the small service businesses in our survey reported that they paid the “right share of taxes,” meaning they didn’t feel overwhelmed by their tax burden. Few enjoy paying taxes but, at least for the small service businesses who use Thumbtack, the tax burden wasn’t a critical factor when thinking about the friendliness of their government. Although there is considerable debate and concern in policy circles about the effects of tax rates on small businesses, the vast majority of the small businesses we talked to weren’t overly concerned—their perceived tax burden was not a statistically significant predictor of their overall friendliness scores.