Every so often this country witnesses a burst of creative citizenship. Ordinary folks, fed up with their leaders' solutions for the nation's woes, insist on trying their own. I call this a "commonsense" rebellion -- and, if my travel impressions are accurate, one is brewing today.

The conditions that triggered this widespread discontent are obvious -- inflation followed by recession, record unemployment, a projected 1983 federal deficit of more than $100 billion. The people are bored by arguments about which party is to blame. They are tired of "curing" inflation by plunging the country into recession and easing recession by renewing inflation.

They are tired, in short, of political parties that seem dominated by different forms of imprudence. The Tweedledumbs cater to one group of special interests and insist on spending too much. The Tweedledopes cater to another group and can't bring themselves to tax enough. And the people are finally saying, "enough."

To the Democrats they say, "Don't try to spend our way out of a recession with government money"; to the Republicans, "We're glad you're bringing inflation under control to the extent that you are. But the price is too high, and the way it's paid is unfair. Common sense tells us there must be a better way to level the peaks and valleys in the economy."

In the past, small business has often been in the forefront of popular movements for change. It led the national demand for a balanced budget; it first sounded the call for limiting the size of government and making expansion of the private sector a national goal. But this does not mean that commonsense rebellions are guaranteed to help small companies. Sometimes, in fact, small business has wound up the unwitting victim of movements it has itself led.

Nowhere is this more true than in matters of tax policy. Small businesspeople have lacked the sophistication, technical skills, and clear strategic goals that would have ensured the passage of tax legislation favorable to their interests. The 1981 Economic Recovery Tax Act provides one good example. Small business leaders played a key role in getting this bill passed. (President Reagan later explicitly thanked them for it.) Nonetheless, overall the legislation has helped individual taxpayers and large companies far more than it has helped small business.

Before ERTA's passage, the effect of the graduated federal corporate income tax helped offset the greater relative burden that regressive payroll taxes put on small companies. Trus, lobbyists for large companies had become remarkably skillful in punching holes in the Internal Revenue Code for their clients, primarily in the form of tax credits. And, in time, many of the nation's large companies were paying taxes at an effective rate below small companies. But ERTA added accelerated depreciation and leaseback provisions to the investment tax and other credits. And now many large companies may end up avoiding the corporate income tax entirely.

ERTA was supposed to expand capital investment. So far it hasn't, and the nation as a whole has not reaped the hoped-for rewards from its passage. Small business did realize some gains -- for example, the provision that increased the amount of property that can be passed on to heirs without estate taxes. There is the risk, however, that ERTA will make tax rates paid by small companies compare even less favorably than in the past with those paid by big companies. This in turn will make these firms even less attractive to equity investors and long-term lenders than they previously were. At the very least, we need a tax code that does not make the position of small business worse.

At best, we need a wholly new tax strategy. This strategy must ensure that a new code be as simple as possible, since small businesspeople lack the time and the resources to deal with unneeded complexity. Second, it must ensure fairness of tax burden vis-a-vis large companies and nonbusiness taxpayers. And finally, new tax policies should provide incentives for new business formation and small business growth. We should keep these goals in mind when evaluating any new tax proposals, such as the minimum tax or the flat tax.

The minimum tax, advocated by President Reagan and Sen. Robert Dole (R-Kans.), would set a 15% floor on corporate taxes -- and would apply to any company whose total tax liability fell below 15% of corporate income. This minimum would eliminate the possibilities for very little or no tax liability that large companies now have under ERTA. The proposal seems fair and responsible, yet small business, as always, must worry about whether a provision like this one, aimed primarily at large companies, might back-fire and increase the burden on smaller companies. Conceivably, a 15% minimum tax could result in more small companies paying more dollars to the government than big companies would.

The flat tax would drop most or all of those murderously complicated exemptions, deductions, and credits in the Tax Code and replace them with one across-the-board rate applied indiscriminately to everyone. This move is designed to simplify taxes. While it is primarily intended to apply to individuals, the proposal has great significance for small businesses, since so many of these are sole proprietorships. A flat tax should make it possible to lower the rate at which income is taxed, while broadening the income stream to which the tax is applied.

This proposal sounds great -- as long as small business doesn't inadvertently lose the few essential tax advantages it now has. Small business leaders need to study this proposal carefully before jumping on the bandwagon. They've been romanced before into giving up barrels of flour for a few biscuits.

The disturbing subject of what to do about tax evasion is also receiving a great deal of interest. In the past eight years, the amount of tax cheating has risen sharply. In my view, this increase is to some extent a judgment made by citizens on the entire tax system. Yes, we need better enforcement and compliance. But we also need to understand that the government has made it nearly impossible for ordinary mortals to cope with tax liability. The mass of regulations and interpretations in the code can benefit only large companies and wealthy individuals who can afford costly professional advice. Throwing the same legal morass at small businesses is neither fair nor sensible.

A Washington accountant once proposed that small business proprietorships, partnerships, and corporations all be taxed on the same basis -- as "small business enterprises." I introduced this idea at a meeting of tax lawyers ostensibly studying simplification of the code. "Too big a shock to the whole tax system," was their response. I don't agree.

The "accordian" or "expanding" tax code is another way to simplify the system. The code would be organized according to size of income -- the smaller an individual's business, the fewer the provisions that would apply. The first 100 pages of the code would apply to everyone, the next section to those whose income was more than $100,000, and so on through the entire code.

To provide incentives for business growth, we might consider giving a taxpayer, whether an individual or a corporation, a credit every year for the first $100,000 lent to small business in that year. This would expand the pool of long-term credit and offset such attractions as liquidity, that large public companies are able to offer to lenders.

To those "free enterprise" proponents to whom this idea is repugnant, there is only one answer. Remove from the code the extraordinary number of credits that benefit large companies, and small companies will be perfectly content to compete in the marketplace without off-setting benefits.

Organized small business has historically been much better at fighting off tax threats than in achieving positive benefits from the tax system. It has, for instance, just spent months winning -- for the moment -- a critical fight with the IRS over the issue of taxing closely held corporations.

Thirteen years ago, Congress asked the IRS to help it deal with the problem of the insider-stockholder or owner-manager who puts money into a closely held corporation. Congress feared that these transactions, while they could easily be made to look like loans, would really be investments of capital. By calling them loans, however, the owner-manager could take money out of the business in the form of interest, which is not taxable to the business when paid, instead of in dividends, which are taxable when paid.

The IRS has tried to come up with a regulation to deal with this possible abuse. It finally drew up more than 40 painfully reasoned pages. Making a loan to your own company -- or even pulling in outside venture capital, under some circumstances -- would be so complicated, with this new regulation, that the amount of credit and capital going to small companies would be greatly diminished. It also might be years before an IRS audit resulted in the imposition of tax, and the payment of back taxes and penalties might be onerous for a company and the lender at that point.

It took a major national campaign spearheaded by Small Business United, the National Association of SBICs, and the National Venture Capital Association to get the IRS to withdraw this regulation. Protracted fights like this one drain small business leaders of the resources they need to make affirmative gains. Yet these critical victories are little noticed or understood by most small businesspeople.

But while the commonsense rebellion is under way, small business ought to be able to win some positive legislative victories. My nomination for the most useful small business goal is still a general job tax credit (see INC., January, page 16). The country is beginning to understand how crucial small business will be for creating jobs in the 1980s and '90s. Retooling for greater productivity and achieving full employment should be the nation's highest priority.

The targeted job credit currently on the books goes to a company whenever it employs someone classified as hard to hire. The new general job credit would be granted to a company for every new employee it took on, regardless of that person's socioeconomic status. At the same time, the company could receive a double credit whenever it employed someone in the former hard-to-hire category.

To reduce revenue loss to the government and to concentrate all benefits fairly in new and small firms, there would be a limit on the number of jobs eligible for credit in any one company. Any revenue loss would be more than made up by reductions in welfare and unemployment benefits and by taxes paid by the newly hired. At worst, revenue to the government would be briefly deferred; at best the credit would pay new tax dividends and spur job creation.

This credit might balance the investment tax credits and the leaseback and accelerated depreciation provisions that currently benefit large companies. And it would be at least as effective as those have been in providing economic stimulus.

A few years ago a general job credit was authorized. Tragically, Treasury persuaded Congress to cut it back to the targeted credit. Had a general credit been implemented then, we would now have in place a noninflationary tool with which to fight the recession's cruelest consequence -- joblessness.

Congress should now move as quickly as it can on this. We still may have time to use a general job tax credit to help lift us out of recession or to quicken and strengthen a recovery. Passage of this proposal will not only help small business, it will also improve the health of the entire economy.