(FORTUNE Magazine) – Call them the forgotten majority: America's small businesses. This faction of the U.S. economy is probably the most misunderstood in the land--from Madison Avenue to Washington, D.C.--because it's such an eclectic and disparate group. It ranges from venture capital-backed dot-coms to mom-and-pop retailers to family-owned manufacturers. But one thing they have in common is that they all seem to agree on certain things: Taxes are too high and too complicated, health insurance is too expensive, and politicians, especially those inside the Beltway, should just go to you-know-where. Although Washington has largely ignored such views, this year seems different. Why? It's not entirely clear. Perhaps the dot-com boom has finally put the spotlight on the influence and power of small business--not a bad thing in an election year. "During this year's presidential campaign, candidates are at least acknowledging the plight of small-business owners by introducing some policies on health care and taxes," says Dennis Whitfield, senior vice president of the National Federation of Independent Business, in Washington.

With that in mind, we decided to go to small-business owners directly and ask their views on the major issues of the day--and how they'd like the all-but-anointed presidential candidates Texas Governor George W. Bush and Vice President Al Gore to address them. FSB assembled its first CEO roundtable, at Chicago's Four Seasons Hotel, in May. Participants included nine business owners from the Chicago area, representing a cross section of industries: Len Batterson, a founder of AOL and now chairman and CEO of Vcapital.com, an online venture capital marketplace; Paul Cooper, CEO of Perceptual Robotic Inc., a maker of video software for the Web; Andrew Cory, president of Cory & Associates, an insurance brokerage and employee leasing firm; Keith Hasty, president and CEO of Best Foam Fabricators, a family-owned manufacturer of foam for the auto industry; Leticia Herrera, CEO of ECI Inc., a restoration and maintenance company; Kevin Kerns, president of Apropos Technology Inc., a maker of software for managing e-mail, voice, and Web content; Tom Schroeder, a self-employed lawyer; Max Suzenaar Jr., president of Minding Your Business, an event-planning company; and Dan Zigulich, president and executive producer of Z Group Films Ltd. Edited excerpts:

Is the presidential campaign on your radar screen yet? If so, which candidate gets the highest marks for focusing on small-business issues?

Kerns: I'm trying to stay informed, but it's tough keeping up with the rhetoric and the hawking of platforms. Governor Bush ran his own business in the past, so he understands what it means to be an entrepreneur. Vice President Gore benefits from what I think are the Clinton Administration's positive policies toward small business.

Okay, fair enough, Kevin. So what are the most important issues you would like the candidates to address?

Kerns: The No. 1 issue for me is the cost of getting skilled labor. There is a lack of talent for companies big and small in the technology area. Universities are not coming close to filling demand. As a result, wages are inflating, and we're going overseas to find talent. We need to create incentives to retrain the existing low-skilled work force and entice students to pursue education in these fields. That might mean introducing a more aggressive student loan program or creating co-ops with companies to guarantee summer jobs to help students pay for loans.

Hasty: I face this too, and I believe we're being fooled in this economy. The gap is widening between the skilled and the unskilled. In Chicago I was surprised to learn that in certain inner-city communities the unemployment rate is as high as 15%. In these areas you see a lot of despair, a lot of hopelessness, and I think it's because the economy is changing from a muscles-and-brawn type of economy to one that requires a lot more education.

Leticia, you're in the service sector. Do you have the same concerns?

Herrera: My biggest concern is actually taxes. After ten years of building my business I'm finally at the point that I'm making some profit. But guess what? I have to go and get a loan to pay my taxes. Maybe I should have done more advance planning, but still, there has to be something that helps small businesses with this dilemma. We take long enough to break even, and yet the moment we do, we end up giving most of it away.

Batterson: Yeah, I agree. Add to that the blizzard of tax forms you have to fill out and the additional taxes you have to pay local and state governments. This makes the burden enormous. There are just too many taxing agencies and entities for small businesses to deal with. I mean, here in Chicago, you get Cook County, you get the city of Chicago, you get the state of Illinois, you get the federal government. I just had a shock earlier this year. We had a nice capital gain on an investment, and my accountant calls me and says, "Oh, guess what? The state of Illinois passed some new tax on capital gains that I never heard of--and by the way, that's going to be $70,000."

Schroeder: In addition to the tax burden that you both talked about, the burden of preparing all these various forms and tax filings on a timely basis is overwhelming. For small businesses this is an incredible drain on personnel, energy, and cash. Most companies incur a lot of professional fees that they really can't afford at various points in the life cycle of their businesses.

Cory: Just to give you an idea how onerous this is, last year alone there were 37 new federal and state regulations that affected small businesses. It's a nightmare. You have to hire advisors and CPAs to help you. Then you have to pray they make no mistakes.

So what would you suggest to help solve the problem?

Herrera: A moratorium on certain taxes that wouldn't kick in until a company is profitable.

Hasty: One possible solution is not to tax a certain base of equity. This would help startups a lot. It would help emerging companies reinvest cash back into their businesses and stimulate growth. For it to work, the federal government and the state governments would have to set some sort of cap or float ceiling noting where that tax would start and how it would rise. It would probably have to vary by industry, because some businesses are more capital-intensive than others. Perhaps it would be based on the typical asset requirement of a business. If the business has, say, $3 million in assets, then perhaps the cap might be 10% of the value of those assets before you start taxing earnings. In this example, $300,000 would be the equity base.

Tom, before we got started today, you said the so-called death tax is an issue you're tracking. Governor Bush has vowed to abolish it. (At press time the U.S. House of Representatives had voted to abolish it and was waiting for the Senate vote.) What's your take on this?

Schroeder: The death tax is probably the single most poorly understood and inconsistently applied tax we've got in this country. Most of my clients don't want to think about it until they come in and we begin to talk about it. It's really a tax on success, which I think is contrary to what the U.S. is all about. I mean, we want people to develop businesses, then pay income taxes as they go along and earn income. Then suddenly, at their death, after they've built this big, successful company, Uncle Sam wants to take a piece of it. Family heirs often lose these business legacies because of the high taxes. And most don't do enough estate planning and are totally unprepared.

For people who are married, you can pass your entire estate to your spouse without tax. If you want to pass it to your children, suddenly there's a big tax. My gay and lesbian clients are just amazed to learn that when they want their partner to inherit what they've built, most of it's going to pay for taxes. It raises very little revenue for the government. It really just makes a lot of money for the professionals who try to help people avoid it.

Batterson: I've been going through this in my own estate planning right now, and it is quite a shock. The numbers that you're going to have to pay in taxes range from 37% to 55%. Unless you do very careful planning, about half of what you've created is going to be gobbled up.

Considering all the tax burdens, do you feel the government is at odds with the little guy?

Cooper: Sometimes, but it also supports us as well. My company wouldn't be here today if I didn't get grants from an SBA program called the Small Business Innovation Research program. It helped me pay for R&D to build a prototype. I can certainly tell you from personal experience that a little bit of money can make a huge difference early in a company's history. And similarly, we had some leverage in an investment round from a State of Illinois venture capital fund. These programs are invaluable. With a little bit of care and feeding, they can ultimately have a huge impact on the economy.

We know there are some mixed views of the SBA in here. Anyone want to step up and talk about it?

Suzenaar: Trying to get SBA funding is an excruciating challenge, especially if you are a service business and don't have the tangible assets the agency is looking for. I couldn't qualify; I had to get a bank loan. So I don't know if I would have the energy to do it again. That's because of all the hoops you have to jump through. There needs to be more support staff at the SBA to help people like me get through the bureaucracy and red tape.

Hasty: It can be difficult getting through the maze, but over the years I got good results out of the SBA. It helped us diversify. Up until 1990, the defense industry accounted for 95% of our business. Then the SBA came out with a program that helped defense contractors like me move into the private sector by providing low-interest loans. That changed the course of our company. Now we are a major supplier to the auto industry in Detroit. We couldn't have made such a transformation without the SBA's help. Really, it's like anything else with any agency, it's getting to know the people within those agencies and getting to understand the district director. In the beginning you need to meet with those guys and develop a relationship so they understand you and your business.

The SBA has set up district offices around the country to help small businesses do everything from raise money to export. Do they work?

Suzenaar: In general I think they do. I for one found them helpful to a certain degree. A few years back the folks at the SBA put me in touch with a program called SCORE. The program finds you a retired executive who donates his time to offer business mentoring and consulting services. For six years I've stayed in contact with the exec they hooked me up with. He's in his 70s and has great experience. He successfully started two companies on his own. I don't know if that program is still in place, but I know the SBA tried to help me find resources to grow my business.

Dan, give us your opinion on what the government can be doing to help the small-business owner.

Zigulich: I get chills when I hear others sitting around this table say that the government should come up with a scheme to help startups with their taxes. The last thing I want is more government intervention. I just think it's going to create a more complicated situation. I've gotten to a point that when I receive any mail from the government, I just put it in an envelope and send it to my accountant or my attorney--I don't even open it.

Hasty: I think the real role the government can have with small business is in the area of health care. Family coverage for our 95 employees is $7,000 a year each. The insurance companies claim that they need it because of the rising cost of health care. That may be true, but I think a real, legitimate role that government can play is to help control those costs. The expense is suffocating a lot of people. Small companies find it hard to provide insurance for their employees.

Cory: I agree. There's a tremendous problem, but there are two or three factors that are always going to increase the cost of health care. First is the technology curve. People are living longer, and there are a lot more new procedures to deal with chronic illnesses that are very costly to do. At the same time, the doctors are fighting with the insurance companies because they are losing control over the billing of their clients. So you've got a very headstrong situation between two entities. And I don't really believe that the government can step in and mediate that situation. It's up to the doctors and the health-care insurers to come up with a solution to the problem.

So who's going to step in and broker this?

Cory: Well, the insurance companies have to because of the threat of government intervention.

Batterson: I'll tell you the problem at my little investment firm. I change health-care insurance companies every two years. And I probably should do it every year. What happens is, you get with one provider and it seems to have a good reputation and it's doing okay, and then it merges or gets acquired, or it changes its whole strategy and its whole policy. One policy is not to pay claims. A whole bunch of them do that. Or they delay the paying of claims by questioning them so they don't have to give you the money for six months.

Does everybody agree that the cost of health care is a major concern for all your businesses?

Suzenaar: I think it's an immediate concern, because to be competitive you have to provide health-care benefits even though you run a small company. And it's tough. I had an experience two years ago that demonstrates the point. One of our employees had a terminal illness and became eligible for insurance. But after the paperwork was submitted, we were advised by our insurance broker that the premiums might go up more than 300%. Right away we had to sit back collectively and decide if we could afford to offer benefits. Obviously, such an increase in insurance premiums could break a small company like mine.

Do you think the candidates are tackling the health-care issue?

Batterson: I think after Hillary Clinton got slaughtered over health care, everybody's just tiptoeing around all this stuff. I don't see any really hard, effective proposals that are going to change this system and make it work. I guess it is going to take a miracle worker to create some order out of this.

Well, let's talk about some of the proposals that have come out so far. Recently, Bush announced his New Initiative Plan, which proposed association health plans. These AHPs would be offered through trade associations and have national bargaining power, which would be exempt from expensive state-mandated plans. (See "The Spotlight's on Health Care.")

Batterson: It's really just more alphabet soup. You know, let's set up some other program, some other agency. Look, all I would need is a major medical plan that I could get at a reasonable cost. And then if my employees needed some other benefits to cover the hangnails, then we could give them that in additional salary and compensation and they could handle it. I think it could be really simple.

What about medical savings accounts? It's a way for you to put money aside, almost like an IRA, and then you use that money to buy the health care that you need. Is anyone using them?

Batterson: I'd like to switch our whole firm into medical savings accounts right now, because it's the closest thing I can find to major medical. But I can't do it because a couple of people have preexisting conditions. I'm afraid to do it, because I'm afraid those conditions won't be covered if we make the switch, no matter what they tell us.

Hasty: I think the real issue is on the cost-containment side. I'm not one for national health care, but I think that something has to be done or else we're never going to get a handle on this problem. I think the government has been afraid to step into this health-care industry and try to contain those costs so the average person can afford health insurance. We're looking at establishing a satellite location in New York. We've done some math. We'll start with an hourly wage of $8.50 to $9 an hour for workers. On top of that we'll have to pay health-care insurance costs of $3 an hour. That's about 30% of the average wage we will be paying.

Next topic: minimum wage. Is this a concern to anyone here? It's always a debate, but this time Democrats and Republicans agree it should go up $1.

Hasty: This is one of these issues where I believe the market should dictate what the minimum wage is. With unemployment the way it is in this country, people compete for labor right now. And that's going to drive those rates up. It's all about supply and demand.

Batterson: That's some old labor union issue that really doesn't exist anymore. It's a nonstarter except with the old labor guys--you know, bring out that old chestnut and beat the drum.

Zigulich: I agree. It's irrelevant. It doesn't affect many businesses anymore.

That leads us to the economy, which has made the minimum wage a nonissue. Do you feel optimistic about it, given rising interest rates and stock market volatility?

Batterson: I feel fairly good about the economy. I'm a little concerned that interest rates may tick up more. That could cause the stock market to decline further, which is not good for the investment business.

Schroeder: I'm very positive. And I agree with Keith Hasty that many people have made progress. One plus is that we've had political gridlock over the past eight years. It actually has proved to be a good thing since it has stopped the government from interfering with the growth in the economy.

Cooper: Well, as the technology guy at the table, I have to say I'm feeling great. Technology is playing a huge role in the future of the country, and it looks like it's just a major engine driving economic growth.

Herrera: I know that we're taking steps in the right direction. I think it has proved to be a great period for women in business. It was amazing for me to see that the SBA, a Cabinet-level agency, put a woman administrator [Aida Alvarez] in charge.

One indicator of economic well-being is the availability of capital. Do you feel there's a glut of money available now for entrepreneurs?

Batterson: Well, as the venture capitalist here, I guess I ought to comment on this. You know, there's more private venture capital now than at any time in the history of the country--about double what it was two years ago. I have a great deal more competition than I had 20 years ago in this town--a lot of it comes from organized VC funds, but a lot of it just comes from individuals who have had success and really want to share that success. So there is a tidal wave of so-called angel money sloshing around the country now to help people get started.

Does anyone have any thoughts about export policy, how well things like the North American Free Trade Agreement have helped small businesses?

Hasty: You know, it has really affected certain industries hard, because a lot of manufacturing has moved to Mexico. In upstate New York there's an extremely high rate of unemployment, because many textile plants have gone to Mexico and to the Far East. What's happening is that unskilled jobs are moving out of this country fast. Which leads us to the question, What do we do with the unskilled work force until they are trained to do technology jobs?

Cooper: In the long run, all businesses are becoming global, thanks to the Internet. My young company already sells overseas. It's not a huge fraction of our sales yet. But it will probably grow. Free trade has to go hand in hand with the Internet, or the online selling bonanza is of no value at all.

Batterson: One of the reasons, in my view, that Silicon Valley has had a lot of success is because about 50% of the revenues of the average Silicon Valley company come from international sales. That was not true for companies here in Chicago. Chicago companies traditionally sold to the Midwestern breadbasket, and they really didn't have much international revenue. But what the Internet really is going to do is create a global economic revolution. Today if you're an Internet company in Chicago, you're basically an international company whether you want to be or not. And it's much easier to be, because of the communication links that the Internet provides. That's true whether you're a company like mine that's providing capital worldwide or to people who are selling anything.

Looking back over the past decade, have any issues of concern for small business been solved? Any improvements?

Hasty: Yes, I think that if we look over the past ten years, this has been the greatest economic time that this country has enjoyed. During the period, small businesses have benefited. There are more new small businesses being created right now than at any other time in history. Venture capital is plentiful. Many of the incentives that the government provided have helped, such as the SBA lending programs. The reduction in taxes has been a catalyst. If you look at capital gains tax rates now, they are the lowest that they've ever been. This has spurred business formation and growth. And even if you look at estate taxes, although they are a major penalty to individuals, they have been coming down.

One final question of all of you here. Will it make any difference who's elected President this fall?

Zigulich: I don't think so.

Kerns: I do. Mainly because I believe if George Bush is put in office it would change the general flow of capital made available to businesses. In general, the Democratic platform has spurred investment in the small-business sector over the past eight years by reducing bank regulation and lowering interest rates, so it's easier to get bank loans. Historically, raising money has been the biggest hurdle for small businesses in this country. The Republicans don't have a good track record in this regard. They have a tighter focus on fiscal restraint.

Batterson: Well, I think it might make a slight difference. Washington is in wonderland, and it is very detached from the average American and the average small-business person. I went on the Internet and pulled off some stuff about George Bush and Al Gore on their programs. I found out that the Small Business Survival Committee, a lobbying group that claims to have 50,000 small-business members, basically gave Governor Bush a "B+" for his small-business program and gave Vice President Gore an "F."

I went and actually looked at both candidate's positions on their Websites, just to see if I agreed with this group. Gore's platform, except maybe a little bit in high technology, is so vague that it's hard to tell if he has a clue about small business. Bush's is a little more specific, but again, a lot of his proposals are from an aerial view of 50,000 feet. They are on topics that really don't affect small-business people and entrepreneurs trying to start their own businesses. Probably a bunch of staffers slapped this stuff together and pulled out the old monographs and wrote it up. So I don't see a lot of hope for any of these guys--Democrats or conservative Republicans. They're not much help to us.

Zigulich: That's true. Our mission is to be successful in spite of the barriers that are laid out by the government. It is difficult to overcome the challenges, but we have to.