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. 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 …

  2. 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.

  3. 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.

  4. 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.

  5. 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.

  6. 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.

  7. 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.

  8. 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.

  9. Ah Boehner … nonsense is his forte … we’ll be hearing a lot of it over the next 2 years

  10. 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.”

  11. “…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.

  12. 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.

  13. 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.

  14. 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.

  15. 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.

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