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UPDATE: Marc in the comments made a point about sole proprietorships with employees that I’d like to address as well.
Barack Obama wants to reduce taxes for roughly 95% of the United States while raising taxes on the other 5% - those making more than $200,000 per year. John McCain wants to lower taxes on everyone, and attacks Obama’s tax increase on the upper 5% as destroying small businesses and jobs. I decided to do some research on this issues to see if, in fact, raising taxes on those individuals making more than $200,000 would reduce employment or not, and I found out some interesting things. The conclusion, however, is this: Obama’s tax increase on the wealthy will not directly harm small businesses. At. All.
First, some definitions so we all know what I’m talking about. So far as I can tell, the only small businesses that pay taxes at the personal income rate are “sole proprietorships”, the simplest type of business in the U.S. According to NOLO.com, a sole proprietorship may have employees, but the census indicates that the bulk of sole propreitorships do not - they’re considered nonemployers, and they are the largest portion of all U.S. businesses.
In 2005 (the last year for which there is both data on nonemployers and employers at the U.S. Census Bureau), there were 20,392,068 nonemployers with a total income of $951 billion (Source: Nonemployer Statistics, 2005, Total for all sectors, United States). Small business employers1 numbered 5,878,784 (Source: Statistics of U.S. Businesses, All Industries, 2005). The total number of all employer and nonemployer businesses in 2005 was 26,375,614, of which 26,270,852 (or 99.6%) would qualify as small businesses as I’ve defined it above. This would be why people respond when you threaten to increase taxes on small businesses - there’s a LOT of small businesses.
But look closer at those numbers. The average income per nonemployer small business is the total income divided by the number of employers, which in this case is only $46,635. What that means is that the vast majority of nonemployer small businesses (which we can probably fairly say are mostly sole proprietorships) would be unaffected by the Obama tax cut. In fact, since they make so little, they’d get a tax cut, not a tax increase.
Yes, you read that right: the average small business would get a tax cut under Obama’s tax plan, not a tax increase as McCain has suggested.
Various websites have suggested that there are between 15 and 20 million sole proprietorships - that’s less than the number of nonemployers from the Census data, but since some employers are certainly covered while some non-employers certainly aren’t, we’ll assume that all the nonemployers are sole proprietorships. Further, if you look at the Census household income survey for 2005, you’ll find that only 3% of all households made more than $200,000. Since sole proprietorship income is taxed as household income, we can probably fairly assume that only about 3% of all sole proprietorships in 2005 would be affected by Obama’s tax increase.
This means that only 3% of all businesses would see their taxes go up as a result of the Obama tax plan.
And this will cause our employment situation to get dramatically worse how, exactly? It’s not like all 3% will go out of business entirely as a result of the tax increase - the increase just isn’t big enough to drive them all out of business. In fact, according to this BusinessWeek Q&A, the numbers are hard to estimate, but that 9% per year is a commonly used value. If we assume that the Obama tax increase boosts the failure rate for sole proprietorships from 9% to 14%, then that’s approximately an additional 31,000 jobs lost.
Of course, if we say that the tax cut to the other 97% of sole proprietorships drops the failure rate from 9% to 8%, then that’s an additional 198,000 jobs created by the other sole proprietorships, for a net increase of 167,000 jobs. Annually.
Or, as Factcheck.org said when they tackled this issue earlier this year:
McCain has repeatedly claimed that Obama would raise tax rates for 23 million small-business owners. It’s a false and preposterously inflated figure.
UPDATE: Let’s broaden the definition to assume that all small business employers with less than 10 employees are also sole proprietorships. From the employer Census link for 2005 above, there were 4.72 million employers with fewer than 10 with a total of 12.83 million employees. Let’s assume that, as above, no more than 3% of those employers fall into the $200,000+ individual pay bracket. That’s a total 110,000 employers and 31,000 employers for businesses with 0-4 employees and 5-9 employees respectively. Again, if we assume that there’s a 5% increase in business failures equally through both sizes of businesses (from 9% to 14%), that’s a total of 5500 businesses sized 0-4 employees and 2790 businesses sized 5-9 employees that would fail due to the tax increase.
The average number of employees for all businesses in the 0-4 employees category is 1.66 employees per business. The average number of employees for businesses in the 5-9 employees category is 6.66 employees per business. Calculating the job losses we get 8,855 employees in those 5500 newly failed businesses (0-4 employees), plus 5500 for the owners themselves, and 18,582 employees in the other 2790 businesses (5-9 employees) plus another 2790 for the owners. Total is 35,036 extra employees losing their jobs.
Adding that to the 31,000 sole proprietorships from the first analysis, that’s a total of roughly 66,000 jobs lost every year. And just in sole proprietorships alone (never mind the newly expanded 0-9 employees category) we created 167,000 new jobs. Include the 1% decrease in employer small business failures (from 9% to 8%) on businesses sized 0-9 employees and that’s an additional 176,000 new jobs, for a total of 343,000 new jobs across all nonemployer and employer small businesses.
Put bluntly, even if we assume the worst case cost of 66,000 jobs and that every business with fewer than 10 employees is a sole proprietorship (and it’s not), the Obama tax plan is still creating 277,000 new jobs every year.
1 I chose to define “small businesses” as those businesses with fewer than 100 employees. The Small Business Administration uses a much more complicated measurement that depends on the industry and total revenues/number of employees.
UPDATE #2: I’ve been able to do some more accurate calculations with the IRS data from 2005, and the numbers of small businesses (defined as all partnerships, S corps, and sole proprietorships) that fall in to the Obama tax increase zone is actually just over 7%, not 3% as I’d originally estimated. However, the rate of business failure and closure is much closer to 2% of all businesses, and so I’ll need to rework my analysis some. Instead of tagging that rework onto this post, I’ll do a new post sometime next week with the updated analysis.
Related posts:
- Dear Joe the Plumber: if you wind up paying more taxes, you’re an idiot (update #2)
- Jobs are from Mars, Business is from Venus
- Campaign mobile update: from bad to worse to what the heck?
- American papers skewing conservative; Trib writer says yup, it’s good business
- Can you Digg an Obama tax cut?
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Congratulations you found the average income per nonemployer. They are worried about the sole proprietors who have employees. It is going to hurt them. You know those 5 million employers you neglected to put into your equation with their over 40 million employees based on your definition of small businesses. They will have to fire workers to stay in business. You’ve proved nothing. Again congrats. Let’s say the average worker at a sole proprietorship gets $30,000 a year. You have 6 workers that puts you over that $200,000(7 * 30K including the owner’s profit) income alone without any other expenses just having to pay wages. (I’m using the logic that you won’t hire workers unless you have the revenue to match it.) So, think of every landscaping business in your area, or plumbers, contractors, electricians, . Those are all sole proprietors, I know because my family owns a rental business and I deal with them on a daily basis. They stay a sole proprietorship because its an easy way to stay liquid, I know because our business has been that way for a long time. And also don’t forget LLC’s can be listed as a sole proprietorship. So please, when you say you have researched something, make sure you have facts that back up your conclusion rather than skew the data to bring voters to Obama.
sent from: fav.or.it [FID2225148]
Marc - I’d happily have neglected all those 20 million nonemployer sole proprietorships if the McCain campaign would have done so.
However, you’ve got a fundamental flaw. The IRS deductions page says that sole proprietorships can deduct the following things as business expenses:
In other words, in your own example, the sole proprietor can deduct all the pay except his/her own profit from their IRS taxes. And until the profit of that sole proprietorship (ie the owner’s individual personal income) exceeds $200,000, they’re unaffected unless they’re doing their taxes wrong. Remember, only 3% of all Americans in 2005 made more than $200,000, and only a fraction of those would be from sole proprietorships.
Even if we applied your logic, the Obama tax plan would still create jobs. I’ll edit that in as an update, however.
Oh, jeez, Brian, there you go again…using logic, math and reasoning skills? I can tell that you’re not a Republican; now i have to decide if i’m offended by your partisanship. /snark
The issue that i’m afraid must be confronted, but probably won’t be, is that with the bills piling up at the national level, any tax cuts may well have to dropped. We are, collectively, that family in the neighborhood that pulled out all the equity in our house; leases cars we can’t really afford; and still have $18,000 in credit card debt. Everything still looks fine on the outside, and we tell all our friends at cocktail parties about our plans to visit Europe next summer…but our real situation is rotten and precarious.
I understand that Obama cannot/will not speak the hard truths publicly, so i appreciate your time and effort to defend what he’d like to do against the fear mongering of the right.
I started reading the article and you lost me at “Barack Obama wants to reduce taxes for roughly 95% of the United States…” Right off the bat, that’s not true. Why should I, or anyone else, read any further?
The scrupulously non-partisan Tax Policy Center says that the Obama plan will lower taxes for about 95% of the population. Where’s you’re non-biased proof they’re wrong?
How can 95% of the population have their taxes lowered, when 29.3% don’t pay any income taxes at all? Many benefit from the Earned Income Credit(EIC) which is a direct transfer of wealth. Perhaps their checks will go up….but then again, I suspect that most who qualify for EIC would vote for Obama anyways.
Jeff
No, no, I remember this “95% of the population” line. FactCheck.org hammered Obama on it. It’s technically 95% of American families, not the American people. They’re citing the same Tax Policy Center report.
Why should I, or anyone else, read any further?
Because it was a generalization and not something the article set out to prove. Even taking into account the contextual meaning of “95% of the United States”, the article’s facts don’t hinge entirely on this one sentence. We don’t have to be so sensitive to various gradients of truth as long as we acknowledge them, do we? This isn’t Meditations on First Philosophy, it’s an examination of what competing tax codes mean for employment.
You declare your sales revenue as your income when filing taxes for a sole proprietor. Then you deduct from what you owe to get you how much you pay for taxes. Your income minus your deductibles gets you your Adjusted Gross Income. Obama says he will raise taxes on people “making” over 200,000 dollars but makes no distinction between income and adjusted gross income on his website, or in any of his interviews, his speeches, or debates. You say income which is completely different from AGI or net profit for sole proprietors. When someone says they “make” x amount of money, they usually tell you their income. They don’t tell you how much they have left after they pay their mortgage payments and other expenses. A sole proprietors’ income is their total sales revenue, not their profit or adjusted gross income.
sent from: fav.or.it [FID2246176]
Marc, you have a fair point that it’s unclear, but given that Obama hasn’t called for a dramatic change in how taxes are calculated, it’s probably accurate to say that the taxes apply to adjusted income minus deductions.
Can you counter my point that, as of 2005, only 3% of the U.S. would have been affected? Or that my analysis, applied to the millions of small employers, still proved you wrong?
If you can’t disprove the basic mathematics or can’t show me where Obama says that he’ll be changing how taxes are calculated in their entirety, then my point still valid, and your argument remains disproven mathematically.
Steve - my apologies on the error. I spent my time researching the taxes, incomes, and such and forgot to verify the accuracy of the 95% claim itself. I apparently missed the right TPC document.
In 2005, however, only 3% of U.S. households made more than $200,000 per year. When I saw that number, I figured that the base number remained accurate.
Yea, but the problem is that it won’t only affect that 3% of small business owners, it will affect their employees as well. It will also affect their prices, causing a ripple effect. You are down-scaling it. And you don’t have to change the way taxes are calculated to say you are going to increase taxes for sole proprietors whose income is over 200,000 dollars. You write your income on the tax form then you counter what you owe with deductions to lower your total taxes. The IRS knows how much your total income is before deductions. If it’s solely based on income, it will affect a lot more businesses than people think especially people who have income over 200,000 dollars due to sales but only bring home under 50,000. They will pay taxes on the same amount of money but pay a higher percentage.
sent from: fav.or.it [FID2249237]
Yes, some people will be hurt. There’s no disputing that. If my math is even close to right, then the number of additional employees that lose their jobs as a result of the tax increases will be around 66,000 annually. But another 343,000 employees who would have lost their jobs under the existing tax plan will keep their jobs. This effectively creates 277,000 new jobs every year simply by keeping people who would have lost their jobs employed. Those employees will be better off than they would have been otherwise.
This is how our form of capitalism works - some people lose their jobs, other people keep theirs or find new ones. Some people are hurt, others are helped. And it’s possible that some of the people you know will be driven out of work in the process. It’s impossible to guess, on an individual basis, who will or will not be injured by this. But someone else will step in to take his or her place.
Sorry, completely disregard my last comment about the income calculation. It didn’t sink in what you were saying about changing the way taxes were calculated until now. I wasn’t thinking in terms of the graduated income tax scale. Again my apologies.
sent from: fav.or.it [FID2249506]
Oh hey, don’t apologize to me. A lot of people make that error. Great article nonetheless.
In answer to Marc regarding “gross income” vs “net income” for a sole proprietor: Look at the Form 1040 you submit for taxes. You will see that Line 12 is where you put business income or loss from the Schedule C. You do not enter gross income on this line, and when you add all the income together, you never use the gross income from the business. A Schedule C filer has “income” reported that is net. Yes, you can argue that the gross income is in the IRS records, but it is nowhere on the Form 1040 and is not included in a person’s income.
I’m no expert on either economics or taxes, but I’d just like to give my $0.02 on the subject of Obama and taxes.
A couple of years ago I read the classic “Economics in One Lesson” by the late great Henry Hazlitt. His “lesson” was that most people look only at the short term, short span gains of one group when considering an economic policy. He then sets out, using a number of examples, to show why a broader perspective changes things entirely.
So listening to those who support Obama’s economic logic, I’m driven to sit back and look at the overall philosophy here, from a distance. It seems to me that at the root of Obama’s economic ideology is the idea that big business should be plundered in order to let smaller businesses thrive. I’m pretty sure that many liberals harbor a romantic fantasy wherein the balance on Main St shifts from big box chains (those soulless tools of Lucifer) to small Mom and Pop enterprises (service with a smile, part of the community).
But let’s be honest, Obama’s tax plan is a disincentive for businesses to expand out of their small business definition. He also wants to sting large corporations for billions more than they are already paying. The inference: small business good for America, big business bad.
But are we forgetting here just how much big business does for our economy? There’s a little thing that everyone keeps neglecting to mention and that’s “economies of scale”. The larger the operation, the lower the costs of materials and the less energy expended per unit of production. This means of course….lower consumer prices.
If we sting corporations and big business for more of their profits, they’re going to get that money back one way or another. How? By charging us more for mass produced goods. If we shift the production balance in favor of small businesses who don’t benefit so much from economies of scale, the cost of goods are going to rise too. Economies of scale affects both manufacture and retail too, additionally.
Whatever way you look at it, this means higher costs to the consumer. How would you like your tax decrease eaten up (and then some) by paying more for your goods? Additionally, since most of our everyday essentials are mass produced, paying higher prices for them is going to mean less dollars out there chasing the kinds of things that small businesses produce.
I just wanted to point out, overall, that it’s not just “tax rates” that affect the well being of business, it’s their potential revenue too. In fact it could be said that their levels of revenue have more influence over whether or not they stay in business than their tax rate. Am I the only one who’s thinking this broadly, or am I just totally and utterly wrong?
I run a small business in Manhattan. I provide a service. If the cost of consumer goods rises as a result of Obama penalizing larger businesses, then a lot of people for whom my service was previously viable as part of their weekly budget, might just be tipped over the edge into thinking “OK, what can we do without here?”
The answer, as always, is that the ONLY way to increase standards of living for everyone is through overall economic growth and the creation of more wealth. Like it or not, large businesses play a tremendous part in enabling such economic growth and those who think that big business can be plundered in order to give small businesses a break are, to me, not thinking of the wider picture. Economic growth requires, not a rearranging of wealth, but MORE wealth and LESS government spending, ie less taxes across the board, not just to the group that Obama figures is going to send him the most votes.
Let’s face it, Obama is an outright socialist who poses as a centrist because socialism is still a dirty word in the Land of the Free. I have no doubt whatsoever that his real ideology is “wealth redistribution.”
Brian,
I could possibly agree with these numbers regarding only sole propieterships. Usually sole propieterships, in my experience aren’t really businesses hiring a majority of employees, but a business opportunity for an individual like for example many indpendent sales professionals, contractors, title agents, self employed attorney’s etc. I’m not saying they don’t hire employees, but it is usually an entrepenuer in a very strong self-employed opportunity. As an individual it is very challenging to net $200,000 after deductions in income. Not to say some don’t do it, but as a sole producer there is only so much time and opportunity one can attain in most given industries as in individual business person. Thus I understand why in your estimation most small business owners would not be affected. I guess we’re on the same page here. However, I think you also need to include S-corps and LLCs. these are corporate entities that favor small business incorporation versus C corps which are usually much larger corporations. To my understanding while C corps have their own corporate tax brackets, S corps and LLCs are taxed at the primary principal’s tax bracket. Thus if you are in the 35% tax bracket any retained earnings in the corporation would be taxed at the primary prinicipal’s tax rate. Conversley, these are also small businesses which I would imagine have revunues after deductions that are greater than the $200,000 limit set by Obama if a principal is single or $250,000 if they are married which would increase their tax rates. I would also argue that part of the reason these small business have greater revenues is because unlike most sole propieters they do employee a small number of individuals which could range from under 10 to your 100 person figure, to 500 defined by the government. Small businesses incorporate like this to separate the business owner’s and companies’ assets and liabilities. It also protects the business owner from being personally sued if the business is found at fault even though the principal could still be accountable. I think you need to include these corporate entities in your small business numbers as well as sole propieterships to have an accurate representation. Obama’s plan will raise taxes on a lot of small businesses, however most of them will not be sole propieters. When business owners are taxed on productivity they’ll have to decide “do I want to work harder, have to manage more employees or do the activities it takes to increase market share and spend time away from my family for a lesser return?” Some will, some will try to keep the business at status quo (admittedly tough to do) and some will say screw this. I can fire my employees reduce costs, get rid of the government red tape ( worker’s comp, group health which Obama will fine companies for not offering etc. regardless of revenue) keep my revenues below the tax increase run the business myself and keep my families’ lifestyle. The loser here will be the employees. In an economy where 75% of job offerings (defined by the government as companies with 500 employees or less even though for arguement I can agree with your addition of 100 or less) we need governmental tax policies that encourage business owners to grow their businesses and offer job opportunities not policies that discourage them. Jobs come from businesses not businesses from Jobs. Higher marginal tax rates will make it harder for some employers to be able to expand their business or kill the desire to do it at all and that does hurt the economy. Also Obama’s claim that he won’t tax starts ups on capital gains is absurd. First, most start up aren’t profitable and second of all most small business don’t pay capital gains unless they’ve raised capital as a private placement and buy back shares as future warrants. they pay taxes on revenue, but very few business will do $250,000 in the first year. Those that do are business sponsored by angels and venture capital, but they are job opportunities for well connected (fine by me) not the middle class Barak deems to protect. However, possibly people Barak would like to get money from as croney donors as any politician would..
James, I’d like you to answer this question: do you think it’s right for big corporations to pay less than a small business because either a) they’re using every loophole in the tax code they can find or b) because they’ve sheltered their profits overseas? That’s the situation as it stands now - big companies have sufficient lobbying power in the government that they’re able to buy tax loopholes with political donations, and so they pay, as a rate, dramatically less in taxes as a percentage than most small businesses do. That’s a crime in my opinion, and it’s not wealth redistribution to demand that this change.
Finally, lower taxes help only so much. There comes a point where you make government ineffective due to lack of investment and the result is the Minneapolis bridge collapse or the massive power outage several years back (if you were in Manhattan at the time, I suspect you probably remember it more vividly than I ever could). The problem isn’t too much or too little government, or even too high or too low taxes. The problem is ineffective government and a lack of public investment. Not government spending - public investment.
Joe, according to the IRS, you’re right about LLCs potentially being taxed at the personal tax rate (but not necessarily - the members of the LLC get to choose whether to select personal or corporate taxation), but I don’t know how to separate the two styles of LLCs for a better analysis. My reading says that S corporations work differently, with members being taxed on their personal income and the corporation being taxed on capital gains and a few other non-personal income ways. As I’m not a tax expert, though, I could be wrong.
As for the 100 vs. 500, if you look at how the SBA defines a small business, it varies hugely from industry sector to industry sector, with some businesses defined by number of employees and others defined by having less than a certain amount of money coming in. I chose to limit myself to sole proprietorships specifically because they were what I could talk to intelligently. It’s possible that the inclusion of some LLCs could alter the job balance, but I couldn’t tell you how much. I’d trust someone like FactCheck.org or the Tax Policy Center to do a much more thorough job of analysis on those issues.
I intentionally didn’t go anywhere near capital gains taxes or corporate taxes (nominally 35%, but with bazillions of loopholes) in the post because I don’t know enough to talk about them intelligently. I agree that we need to help businesses employ people, but there are a lot of ways that Obama’s other plans may (or may not) do that besides tax policy.
Brian:
I’m in favor of any efforts for any business of any size to lower their tax bill, absolutely. Abolish corporate taxes altogether. They just end up as higher prices or fewer jobs one way or the other. It is not a “crime” to find ways to keep more of the wealth that you own, of course it isn’t.
I’m a great believer that wealth is far more effective in the hands of the people who created it. Government is far too big. It is absolutely about reducing government spending. Government isn’t ineffective because of a lack of investment, it’s ineffective because of the incompetence and inefficiency which arises when operations are run by politicians and faceless bureaucrats spending money which isn’t theirs, which has been extorted by force from the taxpayer.
In fact I’m inclined to believe that the more the government has money invested in it, the more inefficient and incompetent it becomes. Anyone who has ever switched from working in the private sector to the public sector will know what I’m talking about. When people are working with money that’s come from the seemingly bottomless well of the taxpayer, they’re far less concerned about efficiency and waste than they are when they’re directly answerable and accountable to the people who’ve actually invested that money.
I’m reminded of the words of Walter Williams:
“Those areas where people are motivated the most by greed are the areas that we’re the most satisfied with: supermarkets, computers, FedEx.” By contrast, areas “where people say we’re motivated by ‘caring’” — public education, public housing etc. — “are the areas of disaster in our country…. How much would get done,” Williams wondered, “if it all depended on human love and kindness?”
“I’m a great believer that wealth is far more effective in the hands of the people who created it. Government is far too big. It is absolutely about reducing government spending. Government isn’t ineffective because of a lack of investment, it’s ineffective because of the incompetence and inefficiency which arises when operations are run by politicians and faceless bureaucrats spending money which isn’t theirs, which has been extorted by force from the taxpayer.”
So I am guessing that the government bailing out the banks and the wealthy bankers who brought about the current situation should not be doing so on behalf of the taxpayer?
And.
“Lincoln Savings and Loan collapsed in 1989, at a cost of $2 billion to the federal government.”
http://en.wikipedia.org/wiki/Keating_Five
Interesting. Flawed, superficial and incorrect, but interesting. Interesting in a confirmation of representativeness heuristics kind of way. Your conclusion is a big bag of conjunctive fallacy tied with a bow of false precision that becomes less true probabilistically with each number you provide. You have parsed parts to arrive at a whole by mixing and matching dependent and independent variables and macro / micro juxtaposition and correlations that have no basis in reality other than you just made them up.
ex- . “If we assume that the Obama tax increase boosts the failure rate for sole proprietorships from 9% to 14%, then that’s approximately an additional 31,000 jobs lost.
Of course, if we say that the tax cut to the other 97% of sole proprietorships drops the failure rate from 9% to 8%, then that’s an additional 198,000 jobs created by the other sole proprietorships, for a net increase of 167,000 jobs. Annually.”
Yeah, that’s fun, erroneous, but, heh, based on numbers I just pulled out of my bum, Obama’s sunny disposition will increase the non-farm payrolls by variable x! WTF?
This, I guess, stands to prove your thesis that Obama’s Tax plan is not going to impact in any significant and negative way Small Business Owners, or at least the greater total number of them; you seem to like this 3% will pay assumptive number. How do you think the vendors (which in most cases are small business owners) are going to do better when their higher revenue customers (also in most cases other small business owners) reduce capital outlays because they are paying between 4.6% and 15% more to the government depending on how they file. Not soo good, I think. So, here is a little real world non-assumptive math for you on an owner that has income of $300,000. That is between $13,600 and $45,000 that is off the book. That is the part time receptionist’s wages. That is the in house book keeper’s salary. Hello, outsource! That is a reduction in benefits for 20 employees. That is reduced purchases of new Equip, Fix and Furn.
But at least the owner can feel patriotic knowing his hard work and ingenuity provided a handout, sorry, a tax cut, to the 30% of the country that pays no Fed inc tax at all. At all.
Have you actually read BOJoe’s SB and Tax plan or have you garnered your info from the media? It seems more the latter than the former.
I won’t argue your data, assume every data point you offer is accurate and you still totally miss the point. (although the BOJoe Small Biz plan puts the number of small bizs @ 25.8 million representing 99%+ of all employers, 2006 is the last available data year for the IRS Statistics of Income Bulletin, and the revenue inflow from small-business constituting income derived from all pass throughs… sole props, partnerships AND Sub S corps is closer to $700 billion, but, why quibble)
The point being, it is not about the total number of SB owners, it is about the nominal tax rate applied to the bulk of SB revenues.You don’t factor many of the relevant variables including that BOJoe’s proposal is not indexed for inflation, uncaps payroll / FICA ( a nice double ding for sole props), raises cap gains and div tax and doesn’t mention if those are included or excluded in the total number or that the total number threshold of $250,000 is based not on the small business income in isolation but on total ‘household’ income. Kind of changes the picture when you imagine an experienced Fireman or Teacher who has sole prop on the side and is married to an experienced Fireman or Teacher. That $250,000 does not seem so unattainable to anyone not in their 20’s. But, fear not, that $500 “Making Work Pay” tax credit will really help the small business owner. thumbs up!
Whatever warm and fuzzy you arrive at, the end principle presents that in your mind, and Obama’s, it is beneficial or least ‘equitable’ to the greater whole of society to confiscate wealth from a small tranche of society