Wednesday, October 15, 2008

Obama & Small Businesses

“Only a few percent of small businesses make more than $250,000 a year. So the vast majority of small businesses would get a tax cut under my plan.”
~Sen. Obama
The US Small Business Administration (SBA) defines a “small business” according to its average annual receipts or the number of its employees. Here are examples from the SBA’s Table of Small Business Size Standards setting forth the maximum average annual receipts by industry that a business can have and still be classified as a small business:
Crop production of all types — $750,000
Animal production except for cattle & chicken/eggs — $750,000
Cattle feedlots — $2.5M
Chicken/egg production — $12.5M
Forestry & logging — $7M
Fishing — $4M
Irrigation, sewage, water supplies — $7M
Housing construction — $33.5M
Heavy and civil engineering construction — $33.5M
Dredging and cleanup — $20M
Concrete, framing, and other housing contractors — $14M
Car dealers — $23-29M
RV, motorcycle, & boat dealers — $7M
Furniture, hardware, clothing & sporting good stores — $7M
Electronic stores — $9M
Supermarkets, gas stations & department stores — $27M
Pharmacies — $7M
There are many more examples at the link. In addition, most of the industries in the Table — such as manufacturers of food, beverages, apparel, print, oil/gas, plastics, plumbing, machinery, computers, electronics, electrical, transportation, and furniture — are considered small businesses based on their total number of employees instead of average annual receipts. In those industries, the cut-off between small and large businesses ranges from 500-1,000 employees per business/industry.

It’s difficult for me to imagine a business that has 50 or more employees (let alone 500-1,000) that has receipts of less than $250,000 per year. And, given the SBA definitions of “small business,” it seems likely that many small businesses in a wide range of industries have receipts of more than $250,000 per year.
If so, it is appalling that Obama would imply that, if he is President, a small percentage of businesses exceed the $250,000 per year cut-off for increased taxation under his tax plan. In fact, the number of businesses subject to additional tax may be large and could well be the 50% number I think John McCain mentioned.
Small businesses are vital to the American economy and Americans’ livelihoods, and it sounds like Obama wants to tax as many as he possibly can.


Brooksley said...

Obama's talking about tax payers- individual tax filers- who earn $250,000 or less. Does nobody here realize this?

Anonymous said...

“Only a few percent of small businesses make more than $250,000 a year. So the vast majority of small businesses would get a tax cut under my plan.”....YEAH SOUNDS LIKE HE IS TALKING ABOUT A PERSON...COME ON STOP PLAYING YOURSELF

Paul Hue said...

@brooksley: I'm confused about what Barak is talking about. But even if you are correct, the most important concept is this:

The most important consequence of changes in tax rates is not the proximate, immediate benefit or penalty of any particular tax return. I assume you believe that tax consequences are limitted to the following scenario:

Some horrible, immoral, racist bastard white person who shoots cats and steals lollipops from orphan babies and exploits his slave-wage workers in 2007 had $250k in income. At a tax rate of, let's say, 35% he pays $7,500k in taxes, to help all those diligently working, doing-the-best-that-they-possibly-can-with-what-they-have high school dropout baby mamas who have three kids by three different men that they haven't married.

OK, so now this year of 2008, the wretched fat cat greedhead who prays every day to white jesus that no black folks ever graduate from high school or earn tax-paying incomes, again earns (of course by exploiting his slave wage workers) another $250,000. The new great savior enters the white house and gets congress to enact "justice" by raising the tax rate on evil rich people to 35%, which is now for that horrible bastard is $8,750, an increase over last year's tax bill of $1,250. Well, this racist bastard can afford it! No harm done!

Right? Well, now what we have is $1,250 less circulating in the free market. Multiply that over all the other horrible racist evil bastards around the country. You're thinking that equates to a few billion extra going into the government, run by people with really smart ideas about how to "best spend" that money, such as perhaps increasing the Section 8 voucher for our proud and honest, wholesome single mother, who reads books to her kids every night, bans them from watching BET soft porn videos, bans them from dressing in gangster wear, dresses modestly herself with no exposed tatoos, and never plays raunchy or violent music in the car with her kids.

But there's another way to look at these new billions that you have "raised for the wonderful government". That is: you have taken those billions out of the hands of private decision-makers. Such as all those evil racist greedy bastards. Well, some of them do such things as purchase cups of coffee. And our "single mother", who is doing absolutely the best that she possibly can, choosing only the best men she can to produce her fatherless children, has finally graduated from community college, with a degree in, oh, let's say graphic design. (Or, perhaps let's skip the husbandless-procreation, tatoos, and slutty dress phase, and consider this woman's sister, who refrained from those choices, and is graduating with this degree without three fatherless children on her hips and no classy tattoos on her arms or breast!)

This woman has applied to an advertising firm that needed a new artist for its account with a regional coffeehouse chain. Well, without those billions of dollars sloshing around the in the free market, those dollars are not available for our young heroine to compete for using her skills and efforts. Her only way to get this money is to qualify for a Section 8 voucher!

Also, that evil bastard who made (or, depending on your perspective, STOLE!) $250k when his tax rate was 30%, finds that with this new tax structure, his evil business is raking in less money, for the same reason that our heroine's job opportunity dried up: billions of fewer dollars sloshing around in the free market. So at the new 35% tax structure, he only makes $210k. Well, that means that Obama no longer considers him "rich", so he gets taxed at the old rate of 30%, which brings his tax bill to $6,300, so he didn't really pay more taxes this year, did he? So that leaves less money for Obama to righteously deliver to Head Start and Section 8. But our evil bastard only paid less taxes because he made less money, which means that our heroine still has less money to compete for using her smart personal choices, in the form of the skills that she has bothered to acquire for herself, and her daily efforts to be productive.

And that, "my friend" (to employ McCain's threadbare phrase) is how "raising tax rate only on those evil, racist rich bastards" really works: harm for everybody. Less tax revs for government do-gooding, and less money sloshing around for free people to compete over. Cutting tax rates for those same evil bastards -- making the tax rate more flat -- works in the opposite way. The evil bastards make more money with the lower tax rate, but actually end up paying more taxes (smaller portion of a larger pie = a bigger slice than a large portion of a small pie), resulting in higher tax revenues for all those highly moral Section 8 qualifiers, and for all the people who work for their income.

Anonymous said...

I think what many fail to see is that Obama plans to UP the corporate tax... And he's going to hike up other taxes that won't hurt income taxes... BUT WILL FORCE the companies listed in this statement to 1) PUSH THE COSTS to YOU! OR 2)FORCE THEM TO LAY OFF PEOPLE.


If you give free money away... who is to say that they won't spend it on DRUGS? or on ALCOHOL? or on SEX? Who's to say that people are going to PAY THEIR BILLS? Who's to say that those same people that DO NOT WORK, will do something right with that money?

OBAMA is ENCOURAGING THE SAME IDEOLOGY THAT GOT US INTO THIS MESS... EASY MONEY! Credit cards are easy money... so max it out. Now the GOVERNMENT is taking my hard earned money to give it up to someone who isn't working as hard?

The problem with GOVERNMENT SPENDING is that they get to choose WHO IS RICH and WHO IS POOR!

Sorry but I just saw a 20 year old holding a damn sign saying that he needs money... That dude was too young and too healthy looking AND he had some pretty nice sneakers on... What the hell? You want me to give money to that guy?! SO he can WHAT? Get more tattoos or something?

What is this world coming to, when SHARING THE WEALTH is a GOOD THING?

When Obama steals money from your wallet... yeah you guys that make 40,000 bucks or so... He's gonna turn around and give it to the guy who is PICK POCKETING your VOTE and the other guy that slum lord... Oh yeah he's also giving it to the guy FUNDING RADICAL ACTIVISM!!!

So I can't wait till those RADICALS get in your face when they want to take your OTHER FREEDOMS AWAY! Because it seems that's the only time you'll see... Obama is more of a FASCIST PIG than you'll ever know.

lemonfemale said...

A business is a legal person and pays taxes as itself, separate from what the owner pays. Therefore a business can make over $250K and, presumably, see a tax hike.

Anonymous said...

Brooksley, you are 100% wrong, companies aka small businesses are considered individuals legally and for tax purposes, Obama is a Socialist who's plans are to redistribute wealth, Look up the meaning of socialist. He never denied it yesterday. Any by the way his bull shit tax cuts are about 50% welfare, so you can understand when a person doesn't pay taxes but get a check from the Fed you're either on Social security/Disability or welfare. It is not fare to penalize anyone in America for being more successful, what if Obama decides that 150K is the break point or 50k or lets go crazy and say 5K. Think about it SBM

Anonymous said...

You folks really need to have a better understanding of what's happening here.


We cannot cut taxes to solve the situation. Someone has to pay for the deficit. The reality is that freeing up money amongst the middle class means that more money is actually circulated in the economy.

Moreover, you are also ignoring that Obama is acting fiscally responsible. Something that Republicans claim to support. The tax burden on the bottom 95% of American has grown under Bush beyond what was seen under both Reagan, Bush I, and Clinton.

The results have been a disaster.

You are all so busy worrying about the top 5% without much thought about the majority of Americans who are struggling to get by. You also, for conservatives, have an utter lack of understanding of the devastation the deficit is having in that China now services our debt, thus putting the U.S. in a subordinate position with that country.

In many ways, you have taken your party and its ideology and raised it up to be a religion. Anyone who dares to speak against it is sacrilegious. Over the years, your compatriots have held virtual burning at stakes. Grand Inquisitors Malkin, Gingrich, Limbaugh, Bennett, Delay, Bush, and others have happily watched "libruls" burned in effigy.

I can only that the real God that your idolatry is under siege.

Your false talk about class warfare and its dangers all the while true class welfare against the middle and lower classes was under way has been exposed. The collapse of the financial systems has alerted people to your duplicitous and intellectually specious claims.

You folks are some of the worst cry-babies in history. You blame others for your problems and then have the nerve to question anyone who dares to question their suffering.

That's the GOP and its minio