Opinion polls find that the public has far more confidence and trust in small business than in Congress – around 59 percent versus about 7 percent. It's no wonder that Republicans and Democrats want to make allies of small business proprietors as they consider changing tax policy.
So when President Obama calls for repeal of President Bush's tax cuts for the very well-to-do, is he dealing a body blow to small business? It's a key question, especially at this vulnerable time for the economic recovery.
Small business is vital to the US economy. The Small Business Administration (SBA) notes that firms with fewer than 500 employees represent 99.7 percent of all US firms. They employ just over half of all private-sector workers and have generated 64 percent of net new jobs over the past 15 years.
Mr. Obama proposes to extend the Bush tax cuts for most Americans: couples making below $250,000 a year and single taxpayers earning below $200,000. More than 97 percent of small-business owners make less than that, an SBA official notes, and would avoid a tax increase.
But "lots" of small business owners still would be caught by higher taxes, says William Dunkelberg, chief economist of the National Federation of Independent Business.
How many? The SBA says there are 29 million small businesses and 97 percent of them wouldn't see a higher tax. So that leaves 3 percent or about 850,000 to 900,000 business owners.
Of course, many of those 900,000 don't fall into the usual definition of small business. They include partners in law firms, hedge fund managers, high-powered consultants, etc., who have maintained high incomes through the recession, notes Adam Looney, senior fellow at the Brookings Institution in Washington. These aren't "mom and pop" businesses.
Do these 900,000 have a disproportionate effect on hiring?
Probably not, says Roberton Williams, an economist at the Tax Policy Center in Washington. Those in that elevated income level often have income from investments and other sources than their "small business." So raising their top income tax level from 35 percent to 39.6 percent would probably have little impact on hiring. The decision to hire a new worker depends far more on demand for the services or products of a small business, not taxes. He sees the hiring argument as a "little disingenuous."
When the 39.6 percent marginal income tax rate was in effect in the 1990s, hiring was much higher than after the Bush tax cuts, he notes.
I disagree with Roberton Williams. Totally and blatently disingenuous. Not "a little." Call a spade a spade.
Things are as simple as 1,2,3.
1, Tax the rich.
2. It's where the money went.
3. Get it back.
And that's the truth.
Additional truthful detail, there will be new small business tax breaks related to creating jobs, it's the law, e.g., here.
Additional truthful fact and opinion links, here, here, here, here, here, here, here and here; (the latter arguing - perhaps in parody - how it's important to allow the rich more money to continue high profit investments in Chinese paper mills and Indian high tech consultancies). That creates and keeps "jobs." I would not argue against such a point. Only my flag-waving blog troll had best assure grabbing the proper flag he wants to be waving, when/if championing keeping more favorable perks and pork in the chute for the special top few.
That's all.
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Coincidentally, watching the entire Colbert segment from Oct. 13, will have Austen Goolsbee in a featured guest appearance, Goolsbee being online also, here.