GRAND OLD tea PARTY = GOtP

GOtP’s SMALL BUSINESS DEFINITION = A JOKE!

Republicans and Tea Partiers (same thing — the GOtP) tell us that the top 2% of income earners will lead the way in job growth because it includes many small businesses — therefore job growth will be boosted by making W.’s tax cuts for the wealthy permanent.  They also tell us that 50% of small business profits go to people in the top 2% of small business income earners, to  back up their false claim. 

Let’s examine that claim:  what they’re telling us is  that their definition of a “small business” is based on how business income is reported to the IRS (rather than the actual size of the business ) — and is actually income from “sole proprietorships, income from rental real estate, royalties, partnerships, sub chapter S corporations, estates and trusts, and real estate mortgage investment conduits (Schedule E); and farm income (Schedule F), as would be reported on lines 12, 17, and 18 of the 2010 Form 1040” according to Nobel Prize winning economist Paul Krugman.

So, authors with book royalties, along with the income of doctor’s offices and law offices, hedge fund managers, etc. are classified as “small businesses” — not too likely to be leading the hiring and job creation that the GOtP is claiming.

Sub chapter S is not a part of my daily word usage, so I turned to a former CEO of my personal acquaintance, for clarity.  It seems that sub chapter S is a term used by the IRS to describe corporations that are privately owned and where the income derived from the business is transferred directly to the owners.  Many of these sub chapter S corporations (as it turns out) are not “small businesses” but are in fact mega international conglomerates — Price Waterhouse, Bechtel and Koch Industries for instance. 

We all know that the engine of job growth comes from small businesses and NOT from large international corporations, so the GOtP has conveniently changed the definition of “small businesses,”  so they can give these tax breaks to their friends and donors.  To classify all businesses that are a sub chapter S as “small” only because they are privately owned is basically dishonest. 

A more accurate definition of a small business, according to this former CEO, might be:  “any business that has less than $50 million a year in revenue, for instance;  or maybe it could be any business with less than 500 employees, rather than as all sub chapter S corporations — many of which are, in actuality, huge businesses.” 

The GOtP has asserted that “the top 2% of “small businesses” account for 50% of the profits of small businesses in total.  With this assertion they basically have admitted that they’ve inflated the “profits” number of small businesses by lumping huge mega-corporations into their definition of “small businesses.”  These large sub chapter S corporations are NOT the engine of job growth — true small businesses are.

So, according to the GOtP we  need to plunge our nation trillions of dollars into debt — by borrowing the money from China — in order to give tax breaks to hedge fund managers, doctors and lawyers, and large privately owned mega-corporations.

Raising the top marginal income tax rate on the highest income earners might impact in a modest way 2% of true small businesses.  And, the administration and the congress are trying with all their might to get tax breaks to these very people — and without much help from the GOtP — in order to off-set any change in the tax code.  

Well, we know for sure whose side they’re on:  and it’s not on the side of middle-class Americans.