Facts vs. Fiction: Conservatives Claims About Small Business Taxes Are Bogus

[JBeukema]

The Bechtel Corporation. PriceWaterhouseCooper. The Tribune Company. These are not the sort of companies that immediately jump to mind when one hears the phrase “small business.” Nor is the prominent buyout firm Kohlberg, Kravis and Roberts or every partner in big-city law firms. But if conservatives in Congress have their way, the owners of these behemoths of U.S. business are going to receive a tax cut next year—under the guise of tax relief for small businesses.
When Congress convenes for a lame-duck session this month, one of the most prominent issues it will tackle is how to deal is the pending expiration of the Bush tax cuts. Due to a Bush-era budgeting gimmick, income tax rates are scheduled to reset on January 1, 2011 to where they were in 2000.
President Obama and many congressional Democrats propose that we permanently extend tax rates for the lower and middle classes—those households making less than $250,000 per year—while allowing the rates for the richest 2 percent of Americans to expire. Conservatives, however, insist on extending all of the tax cuts. And when President Obama suggests “decoupling” the tax rates, or permanently extending those for the lower and middle classes while temporarily extending those for the rich, incoming House Majority Leader Eric Cantor (R-VA) bluntly replied: “No.”
Conservatives in Congress want to claim the mantle of fiscal responsibility, but extending the Bush tax cuts for the rich costs $830 billion over 10 years (including the cost of debt servicing). So some sort of justification for such a budget-busting move was necessary, and conservatives found it in small businesses.
“On this side, we hear the small business people loud and clearly,” said Sen. Chuck Grassley (R-IA). “To those who are pushing the higher marginal rates, I say the burden is on you to show that you are not harming our primary job creators, small business.” And Sen. Orrin Hatch (R-UT) added, “This is about stopping a job-killing tax hike on small businesses during tough economic times."
But according to the Joint Committee on Taxation, just 3 percent of people with any business income at all—from an enterprise large or small—face either of the top two income tax brackets, which are the ones in question. Conservatives eventually conceded this point, but pivoted to the literal number of “small businesses” that they claim will be affected if the tax cuts for the rich expire.
“That's 750,000 small businesses in America, the most productive, the ones that are the most successful, getting hit by a tax increase on top of everything else that's happened to them in the last 18 months of this administration,” said Senate Minority Leader Mitch McConnell (R-KY). But McConnell’s number is only accurate if you take an incredibly expansive view of what constitutes a small business.
Included in that 750,000 is the Bechtel Corporation, the largest engineering firm in the country. It is the fifth-largest privately owned company in the United States, posting gross revenue in 2008 of $31.4 billion. The number also includes the Wall Street buyout firm Kohlberg, Kravis and Roberts, which has more than $54 billion in assets and 14 offices around the globe. The auditing firm PricewaterhouseCoopers, which has operations in more than 150 countries, fits the bill as well.

Conservatives Claims About Small Business Taxes Are Bogus

 

[antagon]

i'm used to the bush-cuts now, but them shits were not directed to small businesses. many, many were caught off guard by the AMT, which cant possibly be seen as a pro-small-biz provision. the sad fact is that small biz advocacy on the hill is garbage. bush nixed clinton's SBA cabinet-level position; neither party's legislatures demonstrate that they know there's a difference between the needs of a 6-7 man construction company and haliburton.