By Arthur Maurice
NJBIA First Vice President
NJPRO Board of Trustees Member

Looking at the evening news, one might think our entire economic system is falling apart in a mire of accounting scandals and corporate collapses. Faith in corporate America is faltering as all the bad news piles up amidst a weak economic recovery.

However, we can all take comfort in this greatly overlooked fact-the large corporations at the heart of these corporate fraud cases represent a relatively small part of our overall economy. For every high-level executive who betrays the public trust, there are thousands of honest entrepreneurs who use bold innovations to create new economic activity that does not rely on creative accounting to make money.

According to the US Small Business Administration (SBA), most Americans receive paychecks from small businesses, which the SBA defines as those businesses with fewer than 500 employees. Small business accounts for 96 percent of all US exporters, 51 percent of national private-sector output, 47 percent of national sales, 55 percent of innovations and, most significantly, 75 percent of net new jobs created each year. Here in New Jersey, more than 98 percent of all businesses are small businesses, among them 200,000 self-employed individuals. Nearly two million New Jersey workers are employed by small businesses.

With apologies to our 30th President, New Jersey native Calvin Coolidge, the chief business of the American people is not corporate business, but small business.

For those who are concerned about corporate scandals and what they are doing to our economy, the much-publicized legal crackdowns are only half the equation. Our political leaders should be working to bolster the health of our small business community, not just for business, but for all New Jerseyans.

A report issued this summer by the Washington, DC-based Small Business Survival Committee sounds an alarm that New Jersey is not as friendly to small business as it could be. It's a call to action for our government officials.

The seventh annual Small Business Survival Index compares New Jersey to the other 49 states on over 20 government-related economic factors that directly impact the success of small business. The results? New Jersey ranked 38th. Only 11 states provided less support for small-business entrepreneurs.

One of the most important factors in the Survival Index are taxes, so it's no surprise that New Jersey-with the nation's highest property taxes and unemployment and business income taxes in the top quarter of all states-would score badly. But other factors such as healthcare and energy costs-where New Jersey rates well above the national average-also bode poorly for the state's small-business climate.

Unfortunately, the recently enacted $1 billion business-tax hike will only worsen the problem for small businesses here. Beginning this year, new fees on partnerships and other unincorporated businesses with three or more owners will cost small businesses hundreds and in many cases thousands of dollars. Meanwhile, incorporated small businesses will be subject to a new alternative minimum tax even if they don't make a profit!

A favorable small business climate requires more than just lower business costs. Certainly, a skilled workforce and a good transportation network are two factors that favor New Jersey but are missing from the index. Still, the index indicates that regional neighbors like Pennsylvania, Delaware and Maryland, similar in transportation and workforce, demonstrate a far superior small-business climate to New Jersey.

While Congress is enacting laws to curb corporate misconduct, it remains to be seen if our state government leaders can work to improve our small-business climate.

is First Vice President of the New Jersey Business & Industry Association, an affiliate of the New Jersey Policy Research Organization (NJPRO) Foundation and is also a member of the NJPRO Board of Trustees.