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)