Resources

Speaking up for Small Businesses: Why your voice matters in the tax debate

Click here to download this page as a PDF.

The Tax Fight of 2010

Speaking up for Small Businesses: Why your voice matters in the tax debate

As a Small Business owner you have a good idea of how important your business is to your family and your community.  Small business is immensely important to the overall economy, and here’s why:

Small enterprises account for 52 percent of all U.S. workers, according to the U.S. Small Business Administration (SBA). Some 19.6 million Americans work for companies employing fewer than 20 workers, 18.4 million work for firms employing between 20 and 99 workers, and 14.6 million work for firms with 100 to 499 workers. By contrast, 47.7 million Americans work for firms with 500 or more employees.

Members of Congress and other wealthy Americans are now invoking the name of Small Business to try and stop the Bush era tax cuts for the wealthy from expiring.  But there is scant evidence to support that there will be a negative effect on regular small business owners. The top 2% of taxpayers, those making over $250,000 a year, will be affected – most small businesses proprietors are not in those tax brackets.  In fact the data shows that only 3% of taxpayers making over $250,000 will be affected at all.  Interestingly, the definition of small business has been expanded to include real estate investment trust owners and the partners of lucrative law and accounting firms. These are not the small businesses most of us think of like local flower shops and restaurants or dry cleaners – and it’s a great opportunity for the real small business owners to talk about what would really help them survive.

Some background on the Bush era tax cuts:

These tax breaks are expiring because Congress did not want to make them permanent in the first place – to avoid a filibuster and get the tax cuts through with only 50 votes.  This analysis was in the Washington Post,

• The cuts were written to expire to allow the bill to pass Congress under fast-track budget rules, known as reconciliation, and avoid a filibuster in the Senate. Just like the final piece of Obama’s health care overhaul, the tax cuts needed only 50 votes to win Senate approval, instead of the 60 required to shut down a filibuster.
• Under reconciliation, legislation may not increase the deficit beyond a 10-year “budget window.” Because the tax cuts would have increased the deficit, Republicans had to write them to expire in 2011.

So why do you keep hearing that the tax cuts will stall the economic recovery? The most recent research available refutes this – and claims about how Small Businesses will be hurt are a big part of that argument. Fortunately it is simply untrue and we have the facts to back it up.

• The CBO (Congressional Budget Office) reported in January on what works to spur job growth and examined 11 strategies – tax cuts for the wealthy were rated as least effective read that analysis here: http://www.cbo.gov/ftpdocs/96xx/doc9619/Gregg.pdf
• The Center on Budget and Policy Priorities has analyzed the effect of the Bush Era Tax cuts and found that most small businesses are not significantly helped or hurt by the upcoming tax changes – and there are really better ways to help small businesses, http://www.cbpp.org/cms/index.cfm?fa=view&id=3251
• The Joint Committee on Taxation released a review of the Bush Tax cuts for the wealthiest, recommending they be allowed to expire as a step toward reducing the deficit you can find it here. http://www.responsibletaxes.org/resources/analysis-by-the-joint-committee-on-taxation-on-tax-cut-lapse-for-rich/

Small Business owners are an important American voice and Members of Congress are waiting to hear how tax changes will really affect Main Street. Lobbyists for wealthy investors and LLC partnerships are trying to speak for you – let them hear your voice instead.

Tags: Tax Cuts and Small Business

« Back to resources list