Friday, July 23, 2010

The Big Business of Government Spending

By: Jordan Ferchill, Women's Initiative

The question of whether or not to cut government spending to reign in the federal budget deficit is the political battle raging in Washington these days. Some say that we have to decrease the deficit to get the economy back on track, while others argue that we need to spend our way out of the current recession. In recent testimony given to the congressional commission on fiscal responsibility and reform, WIPP national partner, Tara Olson, explained that 83% of women business owners favor decreasing the deficit. Meanwhile, a June 11-13 USA Today/Gallup poll shows that 60% of Americans are in favor of increasing government spending to stimulate the economy. What accounts for this radical difference in the opinion of women entrepreneurs and the public at large? Does increased government spending eliminate the competitive edge that many women-owned small businesses have by unfairly subsidizing their competitors?

Government spending in and of itself does not necessarily put small, women-owned businesses at a disadvantage. However, the results of a recent study by Tischler & Associates indicate that many chain stores are tacitly and massively subsidized in this country through tax dollars. The study showed that fast food restaurants incurred a tax deficit of $5,168 per 1,000 square feet, with big box retail developments trailing close behind at a loss of $468 per 1,000 square feet, and shopping centers at a loss of $314 per 1,000 square feet. On the other hand, the study showed that in general local businesses create net gains for tax payers. These findings suggest that given the current allocation of tax dollars, increased government spending would in all likelihood benefit big business and make competition more difficult for small businesses like those that are cultivated by Women’s Initiative.

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