When small is not small


Much of the stated opposition to raising the marginal tax rates on the top two percent of income-earners was that it would hurt ‘small businesses’, the presumed engine of economic growth. But the Center for Budget and Policy Priorities says that this gives a seriously distorted picture of who belongs in that category.

The misleading nature of this broad definition of small business is perhaps most starkly highlighted when one looks at the IRS-published data on the highest-income people in the country. Of the top 400 people — who received $19.8 billion in S corporation and partnership net income in 2009 — 237 would be counted as small businesses. These individuals, whose incomes averaged more than $202 million in 2009, hardly represent what most Americans think of when they hear the term “small business owner.”

Under this definition, both President Obama and Governor Romney would have counted as small business owners in 2011. President Obama’s adjusted gross income of $789,674 included $441,369 in book royalties (net of commissions); royalties are reported as pass-through income, so President Obama would count as a small business owner. Governor Romney’s adjusted gross income of $20 million included $110,000 in author and speaking fees reported as pass-through income, so he, too, would count as a small business owner.

When politicians talk of policies that might benefit or harm ‘small businesses’, you can be certain that they are protecting the interests of the very wealthy. Similarly, when they express concern for ‘small farmers’, the main beneficiaries are big agribusiness concerns.

Comments

  1. says

    It’s like those hospitals that remain unprofitable by buying all the land in town. Weren’t there some “small business” defined based on the number of owners? So Koch Industries is a “small family-owned business.”

    At this point I think it’s safestto assume anything we hear out of Washington regarding money, power, or privilege is lies, all lies.

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