Helping Small Businesses

With a looming deficit, and hideous national debt, letting the Bush tax cuts expire on the uppermost 2% of income earners would seem to make so much sense that politicians would not dare speak against it.  But speak against it they do, and they are all saying the same thing: "It will hurt small business.  It will hurt small business.  It will hurt small..." Ugh! It's a broken record. I can't turn on any political commentary without some Republican hack insisting that ending the Bush tax cuts only on the ultra-rich would hurt small business.  Never mind that such a tax rate didn't hurt under Clinton.  But maybe we're missing the point, here.  What constitutes a "small business" anyway?

When we think "small business," we all pretty much have the same idea.  A mom & pop operation, like Ned's Pizza, locally, or a grandma's bakery, or maybe some entrepreneur making her hobby from the craft fair into a full time job.  But these are not the small businesses Republican politicians refer to.  The Small Business Administration Office of Advocacy defines a "small business" as any business entity with less than 500 employees.  That's pretty big.  So I thought I'd bring the point home with a little quiz.  Let's see if you can guess which of these companies is a "small business."

1. Jacob Leinenkugel Brewing Co.
2. Waste Transport LLC
3. Any McDonald's Franchise
4. PACUR, Inc. (Senator Ron Johnson's plastics manufacturer.)


If you think that's a trick question, it is. They're ALL small businesses! Lenie's employs only 91 people year round. A few hundred part-timers come and go.  Waste Transport seems like a huge company, but employs only a little more than 100 people. Any McDonald's franchise will consist of typically only several stores at most with some 30 or 40 employees each. And PACUR? Definitely a SMALL business! It employs only 79 people! But it made Ron Johnson so much money as a sole proprietor that he became a multi-millionaire, and was able to buy the election away from the ultra-powerful maverick Democrat, Russ Feingold! (Now that's a lot of money for a "small business!")

When it comes right down to it, nearly all business is small business.  Census data shows that 79% of all companies have no payroll.  They're all one-horse operations.  Three-fifths have between one and four employees.  But half of all employed workers are employed by companies with more than 500 employees.  One third of the labor force work for corporations which employ more than 5,000! The only way those numbers make any sense is if we realize that lots of people start corporations which do little or nothing. They incorporate, then go nowhere.

So where do we stand on this whole thing? Might tax hikes on those making $250,000 per year hurt small businesses?  It might, if your "small business" were something like Gruber Law Offices, where roughly 50 employees made a median of six-figure salaries. But otherwise, no. If your small business is hurt by this tax hike on the well-off, then your small business is a very BIG small business!

What really hurts small business start-ups is people not having money to spend. So those predatory credit card lenders who sucked so much money out of the economy in the early 2000's are still costing us, by sucking dry all the consumers who could be out there buying a little bit more, and then spending tons of that money on the Romney Campaign.  Or Citizens' United, which has prompted billions of dollars to be thrown away down the Romney black hole instead of hiring hundreds of thousands of workers.

Look, if what Obama proposed really hurt "small business," I'd be against it. Grandma Fannie's Doughnut Shop should stay open, and not be overrun by Krispy Kreme.  But "small business" should not be measured by number of employees.  It should be measured in dollars.  If your business is netting you the $250,000 per year that is required for you to feel any hurt from Our Trophy President's proposal, then you are not a small business.

Eric