The hand of Trump
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The GOP candidate said it’s impossible to start a business right now. That's an exaggeration.

By Jeremy Quittner
August 8, 2016

Aspiring entrepreneurs: it’s time to abort mission. According to Donald Trump, you can’t ever start a business in today’s world.

In a speech at the Detroit Economic Club on Monday, the Republican presidential hopeful focused broadly on what he thinks ails entrepreneurs: taxes and too much regulation. Yet in comments that momentarily veered off-script, Trump portrayed an entrepreneurial environment that does not match up with reality.

Trump said his plan to cut the corporate tax rate to 15% from its current to rate of 35% would grow jobs. By contrast, he said Hillary Clinton’s tax plan would increase taxes up to 50%—and that her policies would be, more or less a continuation of President Obama’s agenda, which he described as a jobs and business killer.

“Hillary Clinton’s plan will require small business to pay as much as three times more in taxes than what I am proposing, and her onerous regulations will put them totally out of business,” Trump said. “You cannot ever start a small business under the regulatory burden you have today.”

That’s something of an exaggeration. The Bureau of Labor Statistics shows that the number of businesses less than a year old has increased 21% to more than 679,000 since the trough of the recession in 2010. And a recent survey by the Kauffman Foundation reveals that the rate of new entrepreneurs is up 15% since 2014, with 330 out of every 100,000 adults calling themselves a small–business owner today.

 

Still, a Brookings Institution report from 2014 shows that since the 1970s, more businesses have exited the economy than have started up. The think tank did not propose specific reasons why this is the case, other than to say that older, larger, more entrenched firms seem to be doing better than younger companies, and that fewer people today are starting firms as result of aversion to risk, or an unwillingness to leave jobs to start a business. More recent research suggests entrepreneurs may be hobbled by a lower total personal savings rate, which has decreased over the past few decades in tandem with business starts.

It’s true that regulations are a top concern for small-business owners, as noted by the National Small Business Association, a centrist lobbying group, which polled its membership in April. Of the 890 business owners surveyed, more than a third who said they had contacted a congressional representative, said they have done so to urge regulatory reform. Regardless of party, 40% of those polled said Republicans were the party most supportive of regulatory reform, compared to 12% who said Democrats are. (Thirty-seven percent said neither party is.)

Related: Fact-Checking Donald Trump’s Speech on the Economy

There’s little concrete evidence, however, that regulations are the burden that many entrepreneurs—and politicians–seem to think they are, says Dean Baker, an economist and co-founder of the Center for Economic and Policy Research, a centrist think tank. One litmus test for that, Baker says, is the National Federation of Independent Business’s own monthly economic index, which shows that business owners say the availability of credit has approached pre-recession levels, and that scant 2% of small business owners surveyed ranked it as their top business concern.

The NFIB and its membership are typically Republican.

“Dodd-Frank has been a major topic for Republicans and Trump,” Baker said, referring to the 2010 banking industry reform law. “If it has had such a negative effect, it should keep businesses from getting credit.”

Related: The 5 Issues Entrepreneurs Want Clinton and Trump to Address

Trump’s speech, which was booed and interrupted by protesters more than a dozen times, was seen by political observers as an attempt to get his campaign back on track after a punishing few days. Last week, Trump seemed to have lurched off-course into invective, personal attacks of a Democratic military family, and a refusal to endorse some Republican senators and congressmen locked in tight primary races in their home states and districts.

Trump also said Monday he would would cut taxes and eliminate some tax brackets, impose strict regulatory reform, and overturn trade agreements, as well as put an end to the Affordable Care Act, which has given some 17 million U.S. citizens access to health care.

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