Report: Taxes top problem for small businesses in Idaho, nationwide

The recent results of a survey revealed that small business owners’ optimism has increased slightly, though taxes are a top concern for the heart of Main Street.

The National Federation of Independent Businesses (NFIB) released the findings of its Small Business Optimism Index, showing an increase in optimism to 98.8, which is slightly above the 51-year average of 98, the organization stated.

“Expected business conditions and sales expectations contributed the most to the rise in the index,” the organization stated in a release. “The Uncertainty Index rose two points from April to 94. Eighteen percent of small business owners reported taxes as their single most important problem, up two points from April and ranking as the top problem.”

The last time taxes were ranked as the top problem by small business owners was in December of 2020.

“Our latest Index found taxes to be the top problem for small business owners, overtaking regular appearances by inflation and labor quality,” said Suzanne Budge, state director for NFIB in Idaho. “That being the case, our Legislature had commendable foresight in coming up with more than $400 million in tax relief this year. Now, Congress needs to prevent the Small Business Deduction from expiring at the end of the year, and our nation’s Main Street economies will have many more days of sunlight than hidden behind dark clouds.”

Other key findings from the report include:

• A net 1% (seasonally adjusted) of owners viewed current inventory stocks as “too low” in May, up 7 points from April and the highest reading since August 2022. This was the largest monthly increase in the survey’s history.
• The net percent of owners expecting better business conditions rose 10 points from April to a net 25% (seasonally adjusted).
• The net percent of owners expecting higher real sales volumes rose 11 points from April to a net 10% (seasonally adjusted). This component contributed the most to the Optimism Index’s improvement.
• The percent of small business owners reporting labor quality as the single most important problem for business fell three points from April to 16%.
• Fourteen percent of owners reported that inflation was their single most important problem in operating their business, unchanged from April.
• When asked to rate the overall health of their business, 14% reported excellent (up one point), and 55% reported good (down one point). Twenty-eight percent reported the health of their business was fair (up one point) and 4% reported poor (unchanged).

“Although optimism recovered slightly in May, uncertainty is still high among small business owners,” said Bill Dunkelberg, chief economist for NFIB. “While the economy will continue to stumble along until the major sources of uncertainty are resolved, owners reported more positive expectations on business conditions and sales growth.”