Obama’s Tax Increases SIGNIFICANTLY affect Small Business


I am a small business owner myself.  While I certainly am smaller than most, I was clumsily trying to explain to my husband last night that I don’t believe Obama’s numbers when it comes to the number of small businesses affected by his tax plan.

Obama says the majority of small business has income of less than $250K.  I disagree.  I am a small fish in a big pond with my business. Even though my business makes a lot less than $250K annually, I have researched many of my competitors and other small businesses who do demonstrably better than mine. (As my husband puts it, my business is more like a hobby! 🙂   I do have employees and a tax increase would mean a significant hit to my bottom line.

Anyway, Patterico has the facts and makes the case better than I can.  Obama is lying about his tax policy and how it affect small business.  Small business IS the engine that keeps this country running.  Significant tax increases will dampen the productivity and employment capablities of small business…..I KNOW…I REPRESENT THAT SECTOR OF AMERICA!

From Patterico:

At tonight’s Town Hall Presidential debate, I think Barack Obama said this about his tax policies [EDIT: according to the CNN transcript]:

“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.”

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.

Just like so many other issues, Obama is not honest about his tax plan….the man is all smoke and mirrors.

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4 Responses

  1. AN ANALOGY
    Suppose that every day, ten men go out for beer and the bill for all ten
    comes to $100. They could all just pay $10 since they all drank beer or if
    they paid their bill the way we pay our taxes, it would go something like
    this:

    The first four men (the poorest of the 10) would pay nothing.
    The fifth would pay $1.
    The sixth would pay $3.
    The seventh would pay $7.
    The eighth would pay $12.
    The ninth would pay $18.
    The tenth man (the richest) would pay $59.

    So, that’s what they decided to do.

    The ten men drank in the bar every day and seemed OK with the arrangement,
    until one day, the owner threw them a curve.

    ‘Since you are all such good and faithful customers,’ he said, ‘I’m going to
    reduce the cost of your daily beer bill by $20. Drinks for the ten now cost
    just $80.’ The group still wanted to pay their bill the way we pay our
    taxes, so the first four men were unaffected. They would still drink for
    free.

    But what about the other six men – the paying customers? How could they
    divide the $20 windfall so that everyone would get his ‘fair share?’

    They realized if they divided the $20 savings by six they could each reduce
    the amount they were paying by $3.33. But if they subtracted that from
    everybody’s share, then the fifth man and the sixth man would each end up
    being paid to drink his beer.

    So, the bar owner suggested that it would be fair to reduce each man’s bill
    the same way Tax Savings are dispersed, and he proceeded to work out the
    amounts each should pay —

    And so:
    The fifth man, like the first four, now paid nothing (100% savings) – so 5
    men are drinking for free..
    The sixth now paid only $2 instead of $3 (33%savings).
    The seventh now pay $5 instead of $7 (28%savings).
    The eighth now paid $9 instead of $12 (25% savings).
    The ninth now paid $14 instead of $18 (22% savings).
    The tenth(the wealthiest) now paid $49 instead of $59 (16% savings).

    Each of the six was better off than before. And the first four continued to
    drink for free, now along with the 5th too. But once outside the restaurant,
    the men began to compare their total dollar savings. ‘I only got a dollar
    out of the $20’ declared the sixth man.

    He pointed to the tenth man : ‘but he got $10!” ‘Yeah, that’s right,’
    exclaimed the fifth man. ‘I only saved a dollar, too. It’s unfair that he
    got ten times more than I!’

    ‘That’s true!!”shouted the seventh man.’Why should he get $10 back when I
    got only two? The wealthy get all the breaks!’ ”Wait a minute,’ yelled the
    first four men in unison. ‘$20 was given back and we didn’t get anything at
    all. This system exploits the poor!’

    The nine men surrounded the tenth and beat him up.The next night the tenth
    man didn’t show up for drinks, so the nine sat down and had beers without
    him. But when it came time to pay the bill, they discovered something
    important. They didn’t have enough money between all of them for even half
    of the bill!

    And that, ladies and gentlemen, journalists and college professors, is how
    our tax system works. The people who pay the highest taxes get the most
    benefit from a tax reduction. Tax them too much, attack them for being
    wealthy, and they just may not show up anymore. In fact, they might start
    drinking overseas where the atmosphere is somewhat friendlier.

    For those who understand, no explanation is needed. For those who do not
    understand, no explanation is possible

  2. David, that is an excellent and rather funny analogy about our tax system, and what could easily happen. I’m thankful that there are still enough people in this world who are able to look past Obama’s rhetoric to hopefully change the result of this critical election.

  3. SRT,

    David’s comment is so worthy that it needs to be turned into a new POSTING.

  4. David, that was a dead-on analogy. My family income barely exceeds $250K, and only because my husband spent 8 years in Dental School, his parents mortgaged their house to pay for his education, and he works 7am-5pm everyday. His tax deductions would shock most Americans!

    If Obama is elected, my husband will be one of your “richest beer drinker who gets beaten up” and the “beer drinker” who “drinks his beer overseas”. We are researching foreign democracies to get away from Obama’s “Change and Hope”.

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