Small is a Relative Term

In the debate over the Bush tax cuts, the Republicans claim that keeping the tax cuts will benefit “small businesses”. However, only 3% of “small businesses” will be affected by the expiration of the tax cuts, according to the Joint Committee on Taxation, a nonpartisan committee of the United States Congress. John Boehner’s reply:

Well, it may be 3%, but it’s half of small business income. Because, obviously, the top 3% have half of the gross income for those companies that we would term small businesses.

If that’s true then that 3% must be making some very large incomes. Actually it’s more like 2%:

Included in these “small business” are partnerships, sole proprietorships, and S-corps, which often have only one or two shareholders. These entities are popular because they allow the profits and losses to be “passed-through” to the personal income tax of the owners avoiding any corporate tax requirements.

Privately held Bechtel, with 44,000 employees and $30 billion in annual revenue is such a “pass-through” entity, and would be included in the Republican definition of “small business.”

It actually makes a lot of sense, the usual concept of a “small business”, the small, entrepreneurial kind, couldn’t afford to buy John Boehner or Mitch McConnell. Only that 2% can make the necessary payments campaign contributions.

H/T TPM, Bloomberg, The Guardian.

-David Drumm (Nal)

58 thoughts on “Small is a Relative Term

  1. Nal

    Excellent points and well presented. Boner also glosses over the fact that if a “small business” has an after expenses, pre-tax income of 4% of revenue, that revenue is approx $6.5 million. A 4% return on sales is relatively modest. It’s typical for a ditribution business. Manufacturing works at an even higher percentage of pre-tax income to sales revenue.

    As you pointed out these are primarily S-Corps, partnerships or sole proprietorships. The increased tax is only on that portion over $250K AFTER all the salaries, officers bonusses, travel/entertainment/dining/country club expenses and creative accounting have been deducted. So, after that’s calculated. let’s say the business earns $350K in taxable profit. Instead of paying $39K in taxes, Boner and the GOP/teabaggers are willing to balloon the debt to save this company $3K after they ruined the economy.

    Why do they need lower taxes on profits when what the country desperately need is JOBS? The President has proposed (I don’t know if it’s been enacted) a $5000 tax credit for every new hire. If they DO something to help the country and the economy, fine, give them a helping hand, but to just continually hand these top earners more welfare is insane.

    Also, no business I ever ran and know about ever made decisions about growth or expansion based on tax implications. It’s always a function of the risks involved and how they affect return on sales (PRE-tax profits). AFTER tax profits affect dividend and retained earners. The latter may have implication on one’s bank ratio requirements, but that affects an even smaller percentage.

    I don’t know why I pick on Jennifer Anistion because I really like her as an actress, BUT I heard recently she made $25 million in 2009. How many people does Boner think Ms Aniston will hire if he saves her 3% of $24,750,000?

    Again I ask; is this what the teabaggers backed the GOP to accomplish, a larger debt and deficit for the wealthy? I thought the teabaggers claimed to represent working people who felt the debt was too high already.

  2. This Republican concept that the average small business owner/individual in this country personally nets $250K in taxable income each yesr is just absurd. Most small businesses don’t even gross $250K and that’s before expenses.

    I know a lot of small business owners and most of them would be thrilled to be making (taxable income after deductions) over $75K.

    Once again, why doesn’t the President and his handlers stand up to these lies? If not the President himself, some surrogate should be out there on the talk shows etc. just proving this to be the lie that it is.

  3. rcampbell:

    “Again I ask; is this what the teabaggers backed the GOP to accomplish, a larger debt and deficit for the wealthy? I thought the teabaggers claimed to represent working people who felt the debt was too high already.”

    These next two years are going to be so interesting to watch,especially when so many people I think have voted against their own self interest.

  4. Another point, if the republican term “small business” is defined as a non-taxpaying pass through entity then this is truly dishonest. To properly define “small business” would be to go down to the taxable level, i.e., the LLC member, etc. If we go down to that level, their assertions become even more absurd.

  5. “…especially when so many people I think have voted against their own self interest”.

    No doubt about that, eniobob.

    I may as well get into my other pet rant about teabaggers and others voting against their own best interest and being duped by the GOP—health care reform.

    Forget all the stuff about insurers dropping coverage or raising rates for a moment. The current system requires teabaggers to pay for providing the heath care (doctors, hospital stays, surgery, rehab, drugs, etc.) for the 35 million people who don’t have insurance. My brother’s significant other, Alma, has no insurance, but just had surgery to remove a tumor from her ovary. The teabaggers are paying for that. How do they figure this is a better system than Alma having her own insurance?

    They complain about the individual mandate, but we’re mandated to pay the for Alma’s surgery and recovery, aren’t we? In AZ, and I think in most states, drivers are REQUIRED to carry car insurance under penalty of a $500 fine. One wonders if teabaggers know why that requirement exists?

    Does the government have the authority to mandate? Well, the government mandates that car makers MUST install safety belts, we MUST buy a car with seat bealts and in many places a driver MUST be wearing the seat belt or face a fine. Besides, this is a tax which is 100% deductable just by having insurance. There is no question about the governmet’s authority to levy a tax.

    This business of voting against their own better interests and their stupidity in allowing the GOP to manipulate and use them are why I have no respect for teabaggers.

  6. Perhaps my memory is failing, and I am hallucinating…

    I think I recall something attributed to Mahatma Gandhi.

    Asked for his thoughts about Western Civilization, Gandhi replied,

    “I think it would be a good idea.”

  7. Boehner is going to take the House back to the good ol’ days of Tom and Denny … money, money, money

    The only small business Boehner cares about is his own, Boehner Inc, Congress for Hire … come on, the man was one of 12 kids and grew up in a 2 bedroom house which was the best his father’s small tavern business could provide. Boehner knows how to water down the liquor.

    Just keep reminding yourself … Boehner is the best and the brightest the Republican Party has … he’s a teabagger honey.

    Stewart, Colbert, and SNL are going to have a field day.

    I bet Byron admires him.

  8. Blouise Everyone ranted and raved about Nancy Pelosi. I think she is the most hated woman in America. I think she does care about people that have to work for a living. We will have to see if she stays on as minority leader.

  9. Smom,

    I’m pretty sure Pelosi doesn’t give a flying damn about working people. If she did? She’d have never said, “Impeachment is off the table.” It doesn’t take a genius to have predicted what perpetual war and TARP was going to crash the economy. She’s a liar and venal coward, but she’s not stupid.

  10. Buddah I don’t think working people for the most part give a damn about impeachment. They care about keeping their jobs and their homes.

  11. Smom,

    Setting aside the issue of criminal justice in re Bush, that may be true, but it was her job to protect her working people and she did nothing to stop the cause of the economic collapse when she had both the power and the sworn Constitutional duty to do so. A failure to prevent foreseeable injury can be the prime causation for a tort that rises to the level of criminality.

  12. The Media:

    All the local channels have been stumbling over one another for a threat at NASA center in Ohio,”shot fired,we don’t know whats going on Blah,Blah,Blah.
    Turns out it was a security drill.

    They held the keys to the election.

  13. Regarding, “Impeachment is off the table.”

    That was a pivotal moment for Pelosi, IMO — she should never have said “Impeachment is off the table.” She had some leverage before saying it. Once said, however, she had nothing left. (It made her look weak, as well.)

    When Pelosi made that statement, there might have been an interest in impeachment — that is, if the facts had come to light. Now, we’ll never know.

    If a government is able to keep the populace in a perpetual state of worry and fear about the economy, crime, “the war on terror”, etc., that government pretty much has free reign…

    These people play by a different set of rules than many of us. And the place they’re taking us isn’t a pretty one.

  14. eniobob,

    Your observation is on target

    The media dumbs down everything it touches … can you imagine where we would be be were it not for the internet …

  15. Buddah Nancy Peloci would not be the first person I would blame for the economic collapse. There are hundreds and hundreds of men I would blame before her starting with Alan Greenspan.

  16. Buddha and SwM,

    I like Pelosi … Buddha’s points are well made but I do not hold Pelosi responsible for Obama’s lack of fortitude

    She ran a tight, clean ship and willingly accepted the shit Obama allowed to be piled on her as part of her job. Trust me, no ego driven man would have been able to do that.

    It would be a shame to lose her now. Like all the other politicians in Washington she has her flaws, but I do not think her flaws undermine her ability to provide good governance.

    Buddha and I have agreed to disagree on this matter (he’s wrong, of course :) )

  17. blouise to eniobob:

    Your observation is on target
    The media dumbs down everything it touches … can you imagine where we would be be were it not for the internet …

    —————-

    Collectively, the hubris of the wicked; the many good people of conscience in this country; and the power of the internet may be our saving grace.

  18. It used to be that businesses had to spread out the deduction of P&E. I just got an email suggesting that I could straight out deduct $500,000 in business equipment purchase each year. Many businesses are deducting automobiles.

  19. Re: Collectively, the hubris of the wicked; the many good people of conscience in this country; and the power of the internet may be our saving grace.

    “The hubris of would-be tyrants” is probably more appropriate…

  20. *

    *
    Comments 4,418

    WASHINGTON — House Speaker Nancy Pelosi (D-Calif.) is canvassing members of the Democratic caucus before deciding whether to make a bid for House minority leader, she told The Huffington Post in an interview Thursday. Though Pelosi has yet to reach and ask for support, she said, calls and emails of encouragement have come from House colleagues and members of the progressive community

    “anon nurse
    1, November 5, 2010 at 11:17 am
    Regarding, “Impeachment is off the table.”

    That was a pivotal moment for Pelosi, IMO — she should never have said “Impeachment is off the table.” She had some leverage before saying it. Once said, however, she had nothing left. (It made her look weak, as well.)

    When Pelosi made that statement, there might have been an interest in impeachment — that is, if the facts had come to light. Now, we’ll never know”

    One of the 4,418 comments from above aricle:

    “Jack Canuckski 0 minute ago (11:51 AM)
    90 Fans
    I may be wrong, but I think Nancy Pelosi lost a lot of Democratic rank and file support when she took impeachment off the table during the last 2 years of the Bush administration.

    In that way she set the tone for the Dems as being not just non-combative, but downright cowardly.

    Of course, Obama’s first 22 months in office, with his constant, futile attempts at “bipartisanship” has solidified that impression of the Dems by the general public.

    I think that largely accounts for the election results last Tuesday night. ”

    http://www.huffingtonpost.com/2010/11/04/pelosi-canvassing-dem-caucus-for-support_n_779281.html

  21. Absolutely Well Said! Republicans at this level don’t care about real small business. They should use the measurement of their ethics to get a feeling for the definition of small. It isn’t Bechtel. Would the SBA give Bechtel a Small Business startup loan?

  22. Blouise,

    If Pelosi’s ship was clean?

    Investigations and trials would have been the first order of business.

    She isn’t responsible for Obama’s jelly-bones, but she – by her actions – is an enabler.

  23. Sidebar: We are having freakish local internet/cable issues here. If I become non-responsive, that would be the why. I’ll play catch up as catch can if it becomes an interference.

  24. Here, too — re: internet problems.

    Buddha to Blouise,

    If Pelosi’s ship was clean?
    Investigations and trials would have been the first order of business.
    She isn’t responsible for Obama’s jelly-bones, but she – by her actions – is an enabler.

    ————-

    No doubt about it. None. Zip.

    (We still need the investigations and trials, which we’ll likely never see. The corruption runs too deep, though I’d really like to be wrong.)

  25. Buddha,

    By clean ship I was referring to the Office of Speaker as it had been under Tom and Denny and will be again under John

  26. I have to agree with Buddha. I put Obama and Pelosi in the same ship of failed politics/policy–and then I would like to torpedo it.

  27. I thought it was only me with the internet connections,its somewhere on this site.
    Have no problem anywhere else.

  28. I know I stand out here all alone on Pelosi … maybe SwM is with me a little.

    I like Pelosi’s stance on abortion, AIDS, her no votes (later) on the Patriot Act, no vote on Electronic Surveillance Modernization Act, yes on unemployment extensions, yes on Medical Marijuana, yes on Whistleblower Protection, yes on all good social security and medicare bills, yes on Employment, Infrastructure, and Transportation Appropriations, no on Same-Sex Marriage Resolution, no on all the prayer resolution, and yes on statehood for DC. I did not like her yes votes on war in 2001.

    In my opinion she votes the way I would on almost all the social issues … I might be more of a hawk than she is … I might be more of a hawk than most of the bloggers on this site are.

  29. … except in 1999 and the Financial Modernization bill, she voted yes … but then my now senator, then representative Brown did too … the only one who voted no was good old Dennis Kucinich

  30. Blouise,

    Re: “I know I stand out here all alone on Pelosi … maybe SwM is with me a little.”

    —–

    I’m with you a little, as well — I just feel that she sold her soul — and sold out the country — when she “took impeachment off the table.” That being said, I laud her for the good that she’s done — for her principled stances on certain issues.

  31. I’m a Pelosi fan as well. Culpability for the economic collapse may have several accomplices, but Pelosi’s role was neither a primary cause nor could she have prevented it by herself. She did single-handedly brig back health care reform from the dead. I agree with Blouise on her stannces on social issues. Unlike Blouise, I applaud her for trying to unfund the disasters in Iraq and Afghanistan. I don’t recall ever her while Speaker of the House cry like a little girl, though. I heard Joy Behar refer to Boner as the new Weeper of the House.

  32. “Boner as the new Weeper of the House.” … that is sooo good!

    Just wait people … Boehner has been in Congress since the early 90’s and we, here in Ohio, know him well … he is an idiot and dumber than a box of rocks … you’re gonna love it for he is going to say and do some of the most unbelievable stuff … trust me on this and keep your popcorn handy.

  33. anon nurse
    1, November 5, 2010 at 3:04 pm
    Blouise,

    Re: “I know I stand out here all alone on Pelosi … maybe SwM is with me a little.”

    —–

    I’m with you a little, as well — I just feel that she sold her soul — and sold out the country — when she “took impeachment off the table.” That being said, I laud her for the good that she’s done — for her principled stances on certain issues.

    =============================================================

    Like I said … she has her flaws, and oh boy am I steppin’ into it now, I agree with her on the Impeachment issue … I am now running down to my basement and going into hiding … Buddha, mind your blood-pressure …

  34. lol

    My BP is just fine.

    I’m going to tell you a story about another disagreement I had with a friend in college. We were at a fine local microbrewery near campus sampling their wares. Grub was good too. We stared arguing about relativity. He took the position that the most important lesson of relativity was that energy and mass were the same thing. I took the position that the most important lesson was that reality is dependent upon your point of observation. These are the very simplified versions of the conversation. A conversation that got rather animated. The management came to the conclusion it was time for us to leave. To this day, me and D disagree on this point but I suspect we are still forbidden from discussing physics in said brewery.

    The moral of this story is that it doesn’t matter who you disagree with, but who you get thrown out of a bar with.

    I suspect at the end of the evening, we too would be sitting out on the curb talking about what miserable science hating bastards the bartenders were.

  35. “The moral of this story is that it doesn’t matter who you disagree with, but who you get thrown out of a bar with.

    I suspect at the end of the evening, we too would be sitting out on the curb talking about what miserable science hating bastards the bartenders were.” (Buddha)

    ======================================================

    Gyges stole my line …

    Sometimes my arguments make more sense at curb level.

    However, some of the brightest ideas I’ve ever had came to me while visiting a tavern’s “Ladies Room”.

  36. Blouise: Pelosi is running for minority leader. I agree with you. She is much better than all the crooked men we have had, and the one we are going to have now. He is anti-choice and anti-woman. I, for one, am glad you stuck up for her. Now we are back to the good old boys club and crazy Bachman is trying to crash the party.

  37. SwM,

    Yep … just read the good news.

    There are 3 national politicians I’d go to the mat for: Pelosi, Kucinich, and Brown.

    … honest to god, SwM, just wait till you see some of the antics that Boehner’s goin’ to pull … you will literally be rollin’ on the floor … wait for it … wait for it … blam!

  38. What I want to know is – if the DOJ does move on the Bush/Cheney cabal within the next two years, will we hear plaudits from the crowd here or will there be something else to gripe about (like the conservatives always do)?

    They might as well make their move now, if they are going to, cause nothing else is going to happen in the next two years.

  39. BIL:

    “The moral of this story is that it doesn’t matter who you disagree with, but who you get thrown out of a bar with.”

    That just reminded me of a situation a friend of mine and myself were in back in the day also,and we told to leave and my friend in the best possible way he could stand turned around and told the bartender with a straight,and said”I’ve been thrown out of better bars than this anyway.”

  40. Look the republicans already pledged to kill WAY more afghans than obama did and that was their second day in power. Bitching about them wanting to give tax cuts to rich people is just pissing in the wind at this point. Also nancy pelosi’s face looks like someone took a lighter to a barbie doll.

  41. Ekeya, bitching about the way Pelosi looks isn’t a very substantial political argument, not with the Tan Man assuming her duties.

    And the Tan Man has said the planned and previously Republican supported ear-mark moratorium is dead. There’s going to be plenty happening over the next two years Buckeye ’cause I’m not sure the Democratic minority has the guts or desire to act the way the Republican minority has acted for the last two years. But then I’ve been saying it’s all one party for a while; I’d liked to be proven wrong but I’m not going to hold my breath.

  42. Lk:

    “I’m not sure the Democratic minority has the guts or desire to act the way the Republican minority has acted for the last two years.”

    You mean like this:

  43. I just got this in an e-mail,I have to share:

    ” Woman shot in the head

    Linda Burnett, 23, a resident of San Diego, was visiting her in-laws and while there went to a nearby supermarket to pick up some groceries. Later, her husband noticed her sitting in her car in the driveway with the windows rolled up and with her eyes closed, with both hands behind the back of her head. He became concerned and walked over to the car. He noticed that Linda’s eyes were now open and she looked very strange. He asked her if she was okay, and Linda replied that she had been shot in the back of the head and had been holding her brains in for over an hour.

    The husband called the paramedics, who broke into the car because the doors were locked and Linda refused to remove her hands from her head.

    When they finally got in, they found that Linda had a wad of bread dough on the back of her head. A Pillsbury biscuit canister had exploded from the heat, making a loud noise that sounded like a gunshot, and the wad of dough hit her in the back of her head. When she reached back to find out what it was, she felt the dough and thought it was her brains. She initially passed out, but quickly recovered.

    Linda is blonde, a Republican and a Palin supporter, but that could all be a coincidence.

    The defective biscuit canister was analyzed and it was determined ,of course, to be Obama’s fault.”

  44. The human mind has a tendency to look at a current situation and extend it out into infinity. The truth is that nothing lasts forever. Remember the euphoria two years ago when Obama was elected? It was the beginning of a new age of restoring civil liberties and progressive legislation not seen since Fighting Bob LaFollette, Teddy Roosevelt, and FDR. Today we pick up the morning paper and think, “What did that schmuck Obama do now?” I personally don’t think that the tea party has the staying power that some people fear. Those who have been elected to the House and Senate will quickly learn that they can’t pass laws by shouting platitudes into the microphone on the House and Senate floor. The establishment Republicans may pay lip service to their ideas, but will continue to serve their corporate masters. The tea party folks will learn to do the same, or watch their re-election $$$ dry up. I don’t think Dick Armey and the Koch brothers have much interest in “headless bodies in the Arizona desert” or “mice with human brains”. The tea party folks will also be frustrated by a Senate with a small Democratic majority and a Democrat in the White House, albeit one weakened by his own failings. I think that two years down the road the tea partyers will be as demoralized and disgusted as progressives, civil libertarians, and gays are today. Remember when George Wallace was going to establish a permanent Third Party? Remember when Ross Perot was going to establish a permanent Third Party? Just a fading memory today.

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