Small Business Owners Strongly Oppose Cuts to Social Security and Medicare as Part of “Sequester” Agreement

For Immediate Release: 
Wednesday, February 20, 2013

Entrepreneurs favor closing tax loopholes that give big corporations and hedge fund managers an unfair advantage to address our fiscal challenges and avoid sequester

Washington, DCA scientific opinion poll released today shows small businesses strongly oppose cutting Social Security and Medicare as part of a plan to reduce the deficit and prevent the "sequester" a host of across-the-board spending cuts set to begin March 1 because lawmakers haven't agreed on a deal to reduce the deficit by their self-imposed deadline. Polling also revealed that small employers overwhelmingly support closing tax loopholes that benefit large corporations, gas and oil companies and hedge fund managers as part of a plan to deal with our fiscal challenges.


"Cutting Social Security and Medicare would reduce the support offered to my customers for living and medical costs," said Ron Nelsen, owner of Pioneer Overhead Door in Las Vegas, Nev. "This means they have less disposable income and it hurts my businesses' bottom line."

The poll, conducted Jan. 9-16, 2013 by Lake Research Partners on behalf of Small Business Majority, revealed that 80 percent of small business owners find it unacceptable to cut Social Security benefits. However, three in four small business owners support raising the income cap on Social Security payroll taxes, so that higher incomes start being taxed for Social Security, but two in three oppose changing the cost of living calculationwhich would reduce these benefits over time. Entrepreneurs are also against cutting Medicare benefits; 74 percent of respondents said this was an unacceptable way to reduce the deficit, and 67 percent oppose reducing Medicaid benefits.

"Its clear that small business owners believe Medicare and Social Security provide financial safeguards necessary to protect themselves, and their employees' and consumers' standard of living," said John Arensmeyer, Founder & CEO of Small Business Majority. "Without these programs, consumers will have less money in their pockets to spend, which will negatively affect the economy. Instead of reducing the benefits provided by Social Security and Medicare, lawmakers should consider eliminating tax breaks for big corporations, which small business owners overwhelmingly support doing."

The vast majority of small business owners (79 percent) also support reforming the corporate tax code by reducing the top corporate tax rate from 35 percent to 28 percent, while remaining revenue positive by closing corporate loopholes that put small firms at a disadvantage. Opinion polling Small Business Majority released in 2012 found a staggering 92 percent of small businesses agree big corporations' use of tax loopholes is a problem, and three-quarters say their business is harmed when corporations use loopholes to avoid taxes.

Small business owners also identified particular loopholes and tax breaks they would like to see closed. Loopholes that funnel billions of dollars into major gas and oil companies' coffers every year are something that 63 percent of entrepreneurs would like to see eliminated. They also oppose the current system that gives huge tax breaks to hedge fund managers and other finance powerhouses, allowing them to avoid paying millions of tax dollars. The "carried interest" loophole lets these individuals pay a top tax rate of 20 percent on much of their earnings, which is only half of what they'd pay at the top rate for normal wages and salaries. Two-thirds of small employers disapprove of the carried interest loophole, and agree hedge fund managers should be taxed at normal wage and salary rates.

"Closing tax loopholes that give big corporations an unfair advantage and hurt small businesses should be a no-brainer for lawmakers," said Mike Roach, owner of Paloma Clothing in Portland, Ore. "These loopholes put us at a significant disadvantage. Leveling the playing field will encourage economic growth and raise revenues needed to reduce our deficit."

Additional findings:

To read the full report visit:

  • Nine in 10 entrepreneurs support eliminating tax breaks for moving production overseas and providing incentives to bring production home.
  • The majority of small employers believe the most important job for Congress and the president in 2013 is a plan to create jobs, compared to a plan to reduce the deficit.
  • The polling sample was majority Republican, with 52 percent of respondents identifying as Republican, 34 percent identifying as Democrats and 11 percent identifying as independent.

About Small Business Majority
Small Business Majority is a national small business advocacy organization, founded and run by small business owners to focus on solving the biggest problems facing America's 28 million small businesses today. Since 2005, we have actively engaged small business owners and policymakers in support of public policy solutions, and have delivered information and resources to entrepreneurs that promote small business growth and drive a strong, sustainable economy. We are a team of more than 30 working from our 11 offices in Washington, D.C. and 9 states, with a network of more than 45,000 small business owners and more than 2,000 business organizations, along with a formal strategic partnership program of more than 125 business organizations, enabling us to reach more than 500,000 entrepreneurs. Our extensive scientific polling, focus groups and economic research help us educate and inform policymakers, the media and other stakeholders about issues including taxes, healthcare, access to capital, entrepreneurship, workforce development, clean energy and immigration. Learn more about us on our website and follow us on Twitter, Facebook and Instagram.