‘Small’ businesses that aren’t especially small

‘SMALL’ BUSINESSES THAT AREN’T ESPECIALLY SMALL…. For quite a while, a standard Republican argument has been that allowing tax rates on the wealthy to expire on schedule would hurt small businesses. One silly far-right congressman went so far as to insist that the policy would increase taxes on 94% of America’s small businesses. (It wouldn’t.)

The Joint Committee on Taxation recently reported that only 3% of small businesses would be affected by the expiration of Bush-era top rates. Asked about this a week ago, House Minority Leader John Boehner (R-Ohio) said, “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.”

Is this right? The key part of Boehner’s answer was those last few words: how Republicans “would term small businesses.” The GOP definition includes entities that aren’t “small,” and aren’t even necessarily “businesses.”

Many of those 750,000 small businesses aren’t small at all. Some, like Bechtel Corporation, are positively enormous.

The Democratic and Republican figures come from the non-partisan Joint Committee on Taxation. But numerous think tanks and government organizations have examined the data and come to similar conclusions: First, that letting the Bush tax cuts on the top two brackets of “small-business” income would impact a tiny percentage of those businesses; and second, that many of the “small businesses” that would be impacted are actually giant companies — which explains why such a tiny fraction of them can account for half of small business income.

Under the Republican definition of “small business,” the GOP is fighting to protect companies like Wall Street buyout firm Kohlberg, Kravis and Roberts, “which recently reported more than $54 billion in assets managed by 14 offices around the world.” PricewaterhouseCoopers, a massive international auditing firm, qualifies for the label, too. So does Tribune Corp., which owns the Chicago Tribune, the Los Angeles Times and the Baltimore Sun.

In many cases, we’re not even talking about “businesses” at all.

Senate Republican leader Mitch McConnell says President Barack Obama wants to subject half of all small-business income to a tax increase, a move that he says would strike a blow at the U.S. job-creation engine.

McConnell’s numbers only add up if you consider people like billionaire investor George Soros, most movie stars and Obama himself small-business owners, tax experts say.

That’s because the lawmaker is basing his figure on a broad definition of the term that experts say includes authors, actors and athletes who employ few if any workers. It also encompasses businesses that many people wouldn’t consider small, such as Soros’s hedge-fund firm and major law partnerships.

“Every student who is a part-time Web designer, partner in a law firm with a billion dollars of revenue and investor in a hedge fund gets lumped together in the data, along with real small businesses,” said Ed Kleinbard, a former staff director of the congressional Joint Committee on Taxation and now a law professor at the University of Southern California. “We are being over-inclusive in our use of small-business income.”

Well, we’re not; Republican leaders who hope to deceive the public are.

As a member of George W. Bush’s Council of Economic Advisers recently conceded, “How can it be that 3 percent of owners are accounting for 50 percent of small business income? Those firms they’re owning can’t be all that small…. They’re very large.”

Something to keep in mind when GOP lawmakers start lying again.