"High Taxes On The Rich Not A Problem For Small Business: Report" The Huff Post

[applegrove]

High Taxes On The Rich Not A Problem For Small Business: Report

The Huffington Post | By Alexander Eichler

http://www.huffingtonpost.com/2012/07/20/small-business-rich-taxes_n_1690823.html?ncid=edlinkusaolp00000003

"SNIP......................................

Analysts are looking askance at a claim that raising taxes on the rich would spell doom for America's small business owners.

According to a policy brief from the Center on Budget and Policy Priorities, a left-leaning think tank, if Congress were to let the Bush-era tax cuts expire for the wealthiest Americans, it would probably leave most small businesses unharmed. (Hat tip to The Washington Post.)

That's a conclusion that runs counter to what many conservative politicians have said, among them Mitt Romney, the GOP nominee for president. Last summer, when Berkshire Hathaway CEO Warren Buffett first made his call to tax American millionaires at a higher rate than current U.S. tax policy dictates, Romney argued that such a tax hike would put an additional burden on small businesses, since some of them file taxes as individuals.

However, the CFPB analysts, citing Treasury Department data, said that a tax increase on the rich would only affect about 2.5 percent of all small business owners. (A separate estimate from the Joint Center on Taxation said that the number of affected small businesses would be closer to 3.5 percent.)
..........................................SNIP"

[tularetom]

1. How do they define "small business"?

As I recall the accepted upper limits for a business to be classified as small, are actually rather high, in terms of gross receipts, profits, staffing levels, and payrolls. And that was probably done to give some wealthy campaign contributors access to small business tax breaks, interest free government loans, etc.

Some companies with a national presence, that most Americans would immediately recognize from TV or print advertisements, are actually "small businesses".

I can't immediately cite any examples but I'll do a search and edit this post.

Anyway my point is that these very large small businesses are the ones which would be affected by an expiration of the bush tax cuts and that actual small businesses would never notice it.

On edit: see attached article from Guardian Online - Bechtel Corp. is a "small business".

http://www.guardian.co.uk/commentisfree/michaeltomasky/2010/sep/21/obama-administration-congress-small-businesses-like-bechtel

[jmowreader]

3. Here's how

http://www.sbaonline.sba.gov/contractingopportunities/owners/basics/whatismallbusiness/index.html

The definition varies depending on the trade the particular business is in.

Okay...there are five forms of business that any entity may choose to use.

The first two, Sole Proprietorship and Partnership, should never be used because they transfer all business liability to the business owner. IOW, if you have a restaurant set up as a sole proprietorship and someone gets a bad clam, they can sue you and take your house.

LLCs and S-corporations are "pass through" corporations--the business' income is reported on its owners' personal income tax forms. (An S-corporation has no more than 100 shareholders and only one class of stock. It can be any size you want, and NO Bechtel is not a small business, they just have a very limited number of shareholders.)

C-corporations file corporate income tax returns.

The thing is, very few large businesses organize as Subchapter S corporations because the IRS knows this trick already, they watch out for Subchapter S abuse, and the penalties for abusing Subchapter S are high enough you don't want them inflicted upon you.

[kestrel91316]

2. I don't count 1%ers among my clients (thank god).

My clients consist of their VICTIMS: the 99%.

And I certainly am not one of the 1%. Well, maybe the 1% at the BOTTOM, lol.

[DirkGently]

4. Good debunk. Republicans love to conflate "small business" & "monied interests."

[Jeff In Milwaukee]

5. Low taxes on the rich discourage small business hiring...

Remember that business taxes are based on net profit. If a business is wildly profitable, it's going to pay higher taxes. Lower net profits, lower taxes. To the extent that business hire more workers, those salaries are operating costs that lower the net profit. Lower net profits, lower taxes. This is why you see businesses (especially large corporations) slashing payrolls have having three workers do the work that used to be done by five. Since rates are low (especially for the CEO) there's simply no incentive to hire more workers.