The McCain campaign's small-business myth
By Steve Benen Thursday Jul 10, 2008 8:30amThis week, leading McCain campaign surrogate Carly Fiorina, a top advisor to the Republican candidate, insisted that Barack Obama’s plan to raise taxes on those who make more than $250,000 a year would hurt small businesses.
“In the Bush tax cuts, if they are repealed, 23 million small businesses will have their taxes raised. Why? Because 23 million small businesses file their income tax as individuals. And so, when Barack Obama blithely says, only the wealthiest are going to be taxed, he is ignoring the fact that 23 million small businesses file as individuals and those small businesses are the only growing sector of the economy right now and small businesses produce 60%, actually it’s more like 70, 70% of the new jobs in this country.”
We’ve been hearing this quite a bit lately. A few weeks ago, after the Obama campaign issued its first general-election ad, emphasizing that Obama had been taught “values straight from the Kansas heartland,” the McCain campaign, in an odd non sequitur, responded, “Barack Obama wants more taxes from 21 million small businesses.”
And the week before that, McCain delivered a speech to the National Small Business Summit, arguing, “Senator Obama’s plans would add to the difficulties of small business in other ways, too. Currently, there are the 21.6 million sole proprietorships filing under the individual income tax. When Senator Obama talks about raising income tax rates on those making over 250,000 dollars — that includes these businesses as well.” Both The Hill and Bloomberg News passed along McCain’s claim as if it were true.
It’s not. In fact, it’s demonstrably false, and like far too many of the McCain campaign’s talking points, has been debunked repeatedly.
But as long as the McCain campaign is going to keep repeating blatant untruths, we might as well go to the trouble of explaining why.
McCain rhetoric, meet reality.
…Obama has proposed rolling back the Bush tax cuts only on “people who are making 250,000 dollars a year or more,” and according to the nonpartisan Tax Policy Center’s table of 2007 tax returns that reported small-business income, only 481,000 of those returns are in the top two income-tax brackets — which include all filers with taxable incomes of more than $250,000 — not 21.6 million.
Jay Newton-Small fleshed this out in even more detail.
Okay, let’s assume there are now 23 million small businesses in the U.S. today (the latest stats I could find were 21.5 million “schedule C” class businesses in 2005). There’s no way that all 23 million of those are netting more than $250,000. In fact, 94.5% of all “flow-through” entities (self-employed folks, which generally tend to be small businesses, though Tiger Woods also falls into this category) had receipts under $100,000 in 2007.
Fiorina was building on a Bush argument from 2004. Bush loved to cite on the stump the plight of the 4.1 million “subchapter S” companies – another catagory of small businesses that have less than 100 shareholders and pay individual income taxes. As my former Bloomberg colleague Ryan Donmoyer — the best tax reporter in town — pointed out, the argument was a bit ridiculous because less than 5% of small businesses who file under sub-chapter S made more than $200,000, Kerry’s threshold in 2004. Putting aside the dubiousness of relying on a stale Bush argument for his tax cuts, even with the sub-chapter S filers added in the total number of small businesses effected by a tax hike on those who net more than $250,000 a year remains a few hundred thousand – nowhere near the 23 million Fiorina claimed.
OK, so McCain, his aides, and his surrogates have been clearly getting this wrong. Either they’re repeating bogus talking points without knowing what they’re talking about, or they’re deliberately lying. Which one is it? Apparently, it’s the latter.
We know this because Time asked Fiorina to explain how she arrived at the 23 million figure. The McCain advisor/surrogate responded:
“My point is this: when Barack Obama says that the Bush tax cuts only helped the wealthy it is factually untrue. It is factually true that 23 million small businesses file as individuals. It is factually true that small businesses create 70% of the jobs in this country. So I honestly won’t even attempt to explain Barack Obama’s economic plan. You ought to ask them that, though.”
So, confronted with reality, the McCain campaign digs in to lie some more. Or, as Newton-Small concluded, “This statement, while factually true, is terribly misleading since only a small percentage of the 23 million small businesses would actually see tax increases and the Obama campaign argues that under his administration small businesses would benefit from his universal healthcare plan, offsetting any tax increases the top tier earners might see. So, when running HP did 23 million = a few hundred thousand? No wonder she got fired.”
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And it is a surprise that Republicans lie??
Frist, maybe
Of course the small biz REPORT less than $100K. Most are cash buisnesses and all cash biz UNDER report their flow through SEVERELY. To the point of fraud. Yes, you heard me right, I do no trust ONE cash business owner in this country. After a neighbor, wife of a local store, was in my house and ouright told us that they DO NOT REPORT all their income. And said it proudly. As if it is a given. It has to be rampant and across the board. I could not even find a place to report them. Me and my wife were fucking dumbfounded by her brashness.
The quick & easy guide to debunking Republican Myths:
Republicans = Big Business by a 5 to 1 ratio over Democratic candidates
Even in years when their contributions are affected by the political climate/breeze
Big Business - doesn't like small business, it was there once (in most cases) and will do everything possible to eliminate competition (republicans, dumb a$$es, and right wingnuts call that 'social darwinism'/free market/'supply side' economics).
So easy even Sean Hannity could read....
Damn, I own a small business and I would be elated if I made $99,000 in one year. If a small business is making over $250,000/year, then they are foolish to file as sole proprietor when they can easily become a LLC and save in taxes.
Aside from McCain's misrepresentation of the numbers, there is a further issue with this argument:
There is no reason to treat people whose income comes from small proprietorships any differently from those whose income is from a W2 job or any other source. It's a red herring.
Incidentally, I own an LLC now and used to own an S-Corp. If I make $250,000 next year from my LLC, I *should* pay more taxes. (I have a big problem with the double hit on self-employment tax, but that is a different issue.)
Fiorina is a liar. You can go on youtube and see a clip of her looking in the camera saying he (Obama) is going to raise your taxes. The reality is 95% of the people watching are not going to get a tax raise and Fiorina knows it, but the "liberal" media won't stop her from saying it.
This cuts both ways although not in neocon eyes.
It means not only that people won't be hurt by the tax increases but it also means the Bush fantasy of how the tax cuts will help people is also false. Ref: U.S.A. Economy 2000-2008.
I was also going to add that in neocon eyes, the dems have somehow destroyed the economy during the Bush years. His tax cuts are the only reason we're not a third-world country right now. Way to go dems you losers! :)
There are 23 million small businesses (that make over $250K) who file as individuals....who's their accountant - Barney Fife?
Democratic Party Unity (aka right wing hater) @ 2:
So true - the big business will do anything to put the small business "out of business". Just look at the WalMart model.
OT - btw - I added your link to Apollo Alliance to my blog. It's a really good website that you are connected with and I want to visit it more often.
When my husband and I owned a restaurant for several years, we employed 40 people and worked 7 days a week... $250,000 income? hahahahahahah! It was all we could do to keep the wheel turning. A small business owner is like the Atlas of American economic reality.
Small businesses seem to be doing a lot of folding here in AZ. They have just opened a large mall and condo complex next to the Cardinals football stadium and can't seem to find any occupants - especially for the condos. The failure of the mall to attract business tenants tells me that, perhaps, medium to large businesses aren't doing so well either. But the Greedy Old Plutocrats don't need no steenking facts.
Scott @ 5:
I think that Obama would have to raise taxes to pay for all of the "tax cuts to the wealthy sleight-of-hand" and the rest of the looting of the public treasury. The Pigs know this and will pounce all over it when it comes to pass.
theWalrus @ 8:
Maybe Smith - Barney Fife?
McDole? Johnny come lately is finished. Like Dole,both were promised a run at the presidunce. Fix is in? Guess again? Bush will be in office for another 4 years--Iran Invassion for november 2008. Like they said--if McCain looks as if he is out of the race and Obomba is the lead horse---Good bye Iran.
She was back on NPR this very morning repeating this crap.
Thnk maybe she's running for something?
So, let's see if I've got this straight...McCain and company get caught in another lie. Why is the MSM not all over this story? Oh, I guess they're too busy following up on the Fox "News" exclusive about Jesse Jackson or something.
It's like the lie being spread about the Chinese drilling 60 miles off the coast of Florida, repeated by republicans. It's so much easier for the simpletons to understand things like "drill now, drill here, pay less" and "Obama's going to raise your taxes" so why bother trying to explain things that require more than a one-sentence answer.
The American people will get what they deserve in November, if they don't wake up to the McCain sham.
QuakerDave: She's running for VP and having an "epic fail" at it.
Heard Fiorina on NPR as well. Must have looked funny driving down the road yelling "Debunk! Debunk it Renee!" Sadly, wasn't to be.
I wish Obama would simply start running ads, and saying this in pubic too, that say DO YOU WANT FOUR MORE YEARS OF LIES ? FOUR MORE YEARS OF DECEPTIONS ? and one by one list and state all the lies of THE SHIT STAIN IN CHIEF BUSH and what those lies and deceptions then lead too and created. Then juxtapose all the evil fucking lies of McBush and his PUPPET MASTERS like this one about the million 'small business' bullshit. And then state this "DO YOU WANT FOUR MORE YEARS OF THESE LIES BY McBUSH ? contrasting these fucking lies with the actual reality. Let the facts speak for themselves ....
OT
I have not been able to get firedoglake for 3 days. Does any one know what's up?
Does anybody understand why a woman who failed miserably at running a computer company is anyone's adviser?
sunshine @ 18:
Just went there. Took a bit longer that usual to come up, but it's still there.
Forge @ 19:
Because Republicans reward failure.
Forge @ 19:
Because nothing says "success" for the God Offal Putzes better than a miserable failure eg "heckuva job Brownie."
Mickxotic @ 12:
And yet they still seem to find the billions to send to Iraq every month and for all those no-bid contracts that KBR & Halliburton cheat America by renegging on.
I agree with Merle Haggard,
"Let's get out of Iraq, and get back on track. Let's rebuild America first."
http://www.youtube.com/watch?v=6jrHPjm4qKM
Only slightly off topic.
I got an email from Al Franken this morning and here is an actually excellent example of news reporting about an excellent example of an attack ad.
I always wondered about this "small business" thing. Aren't republicans all for personal responsibility and making it yourself?, "pulling yourself up by your own boot straps"? Aren't small business owners in competition? That some fail or do poorly is how it goes. Shouldn't thje republicans be saying to them, "suck it up!" "get off your welfare" "make things happen for yourselves". What's so special about "small business" that the republicans always like to talk about them?
The operative word is "taxable" before "income." Gross receipts have little to do with taxed income, which can be reduced by leasing vehicles for family members (employees and officers) and subleasing property from family, providing income for kids or Gramps. There's little reason for a well-run family business to show any income. And keep your receipts!
Mickxotic @ 13:
AAAAAAAAAAHHHH HA HA HA Thank you for brightening my morning.
"... and those small businesses are the only growing sector of the economy right now and small businesses produce 60%, actually it’s more like 70, 70% of the new jobs in this country.”
It's statements like this that piss me off! Businesses do not create or produce jobs. Businesses provide employment. The demand for goods and services creates jobs -- and businesses. If there is no demand for goods and services, there are no jobs -- or businesses. Somehow our "corporate masters" convinced the majority of the populace that it's the other way around.
Carly Fiorina wears the ugliest boat shoes ever! Oh god, please make her VP or better yet, incompetent secretary of the treasury!
When did Obama get a universal healthcare plan?
alicia01 @ 25:
Quite simply the laws that regulate small businesses also regulate big business. Big business is sacrosanct to the Republicans, but if they got hot under the collar about regulating big business they betray themselves.
Standard CORPORATIST (not just Republican!) BS !!
They ALWAYS truck out the "small business owner" whenever the large corporate interests are threatened and pretend that the small business owner will be hurt.
Truth is the small business owner has more in common with the average citizen than with the large corporations.
And small businesses thrive in socialist coutries too - though again it's the mom-and-pop who run the corner stores that are always held up as the people who would suffer if we were not a greedy capitalist society.
Standard BS.
So many small business people vote Republican because they think they're voting their self interest. Why don't the Dem's argue that hurting the working class - their customer base in most cases - hurts them? Dem's let too many false perceptions go unchallenged.
Several people have complained that it's unlikely for someone to make 250k or more as a small business proprietor and while that may be true I think the tax increase applies to the business's revenue, not the personal income (assuming I'm reading it correctly).
McCain may have the numbers wrong. But as Grover Norquist explains, it's basic economics: it's the tax rate itself that matters, not the number of small business owners.
http://dyn.politico.com/printstory.cfm?uuid=0E92FEE0-3048-5C12-0002330C2...
you can tell by her response that carly knows the truth but she also knows the public doesn't...they just taxes will
be increased at a time when many are struggling
MountainMan23 @ 33:
Seems more like standard BS from YOU. Small businesses don't thrive in countries with socialistic programs BECAUSE of the socialistic programs- they always thrive due to economic freedom. There's no purely socialist country out there where small businesses thrive. The free-market has nothing to do with greed- it has to do with people cooperating so they can be better off then they were before.
Countries that are bent more towards socialism do have many legal monopolies however, because they erect constant barriers to entry and give out subsidies to inefficient companies that they like.
Even if it was true, arguing that people making 250,000/year are struggling is a tough argument. I'm sure they will distill it down, and say 21 million small businesses and farmers will pay more under Obama.
Since McCain continues to cut taxes, it only makes since this more will pay under Obama, so its just a matter of spinning it.
Cats r Flyfishn @ 10:
What's wrong with the Wal-mart model, is their crime of low prices of products that people want make you that angry? Small businesses that are able to stay in business when a walmart comes in do so because they are innovative and can provide special services that walmart can't. Should we all be forced to go to higher priced "mom-and-pop" stores because you think we should? No one is forcing you to shop at walmart.
Cutting taxes doesn't cause the problems we have- but rather, cutting taxes while RAISING SPENDING does. Spending needs to go down- but nothing is wrong with tax cuts across the board. People work really hard and need to be able to keep what they earn without having to pay tribute to King George.
For all those that think higher taxes on corporations is a good thing, remember, corporations are made up of people- and higher taxes on corporations really means a higher tax on either the customers, employees, or shareholders of a company. Add to the fact that the money that's taken from taxes which COULD be used for higher wages, providing cheaper products, etc. is instead thrown into the blackhole known as government spending.
I'd say to quickly look up all the countries that have a higher corporate tax rate than we do- Pakistan, Suriname, Chad, Libya, Republic of Congo, Cameroon, Benin, Togo, and Vietnam and tell me if they're a huge success or not.
I worked as a consultant - sole proprietor - for a year or two. Made nowhere near 250,000 but I got milage, computer hardware and software, business trips, etc as deductions. $250,000 in taxable income is a very sucessful business that should pay a reasonable tax.
Theguy @ 38:
That statement is wrong on so many levels, it's laughable.
The thing I've been saying for a long, long time is that without any safty net, people don't take the risk of starting a business. People stay in a dead end job because they have a chronic illness and can't afford to loose their health insurance, or for any of a myriad other similar reasons. Until people can take financial risks without having to worry about there physical health, the status quo will always win. We've become a country that has been conditioned to be irrationally affraid and we're cowered into a corner. Wake up America!
"The boat is drifting
from the ones who control us.
They never have enough. They never have enough.
They never have enough. The money is all that they love"
Democratic Party Unity (aka right wing hater) @ 3:
Sheesh, I guess McCain and I have something in common. I don't understand economics all that much. That said, I do know size is relative. If a business isn't a global conglomerate raping and pillaging the world for more more more, then yeah, I guess it's small potatoes.
Frankly, I think McCain is only against having his own taxes raised in his cute little separate tax return.
Have I said I despise McCain and all his surrogates today? There we go.
I think he "mistakes" gross profits with net, taxable profits.
Most of the SB owners I now would be overjoyed to NET $250,000.
And they wouldn't be filing as sole proprietorships either.
Small businesses are dying in this country, have been for years.
Liberal AND Proud @ 43:
In what way is it wrong? That's exactly what the free-market is- you pay $1 for a candy bar because you think the candy bar makes you better off than the $1 you are holding- and the owner thinks that the $1 is more valuable than the candy bar he has. Its an extremely easy concept to understand. Socialism on the otherhand- uses force and central planners to decide what people want and don't want.
Free market is based on COMPETITION. Not cooperation. Competition..based on greed...whether driven by material goals, passing of genetic code...whatever...it is based on winners and losers. PERIOD.
And the economic type of capitalism you refer to in your post #47 is not the type of capitalism practiced today.
I heard this same talking point used on NPR this morning by a McCain surrogate. The NPR host didn't follow up in any way whatsoever. She just kept reading from her list of preplanned questions. There was zero follow-up. Even NPR doesn't hold these people accountable.
Liberal AND Proud @ 48:
Of course competition arises and it plays a very important part- but its not "based on greed"- its based on needs and wants of individuals that feel they will be better off with one thing over another. If I want to purchase a car- and one company makes a car that breaks down after you drive it for 2 miles, and another company "competes" and makes a brand new car that never breaks down- do you consider that innovation to be greed and therefore a negative? If I want to get a job and one employer offers me $20,000 a year and another offers me $30,000, am I greedy because I chose the larger salary? And it definitely is based on cooperation because unlike socialism- you are not FORCED to purchase/sell or do anything if you don't want to.
99Luf Balloons @ 2:
A few years back, we did some major outside remodeling of our home. It included all new windows and 4 sliding glass doors, all new clear cedar siding and finally a new paint job. The house is ~4000 Square feet, so it was a major investment. The paint contractor was a Korean guy, who's crew did a nice job. When it came time to 'settle-up', he told my wife and I, if we would pay in cash, he would not have to charge us sales tax, saving a big chunk of change. I thought about it a minute, and realized, he did not want to report it as income. I think the total was > $10K. I told him I was paying by check, including the tax. I also told him that I was pissed. He had been given an opportunity to immigrate to America, start a business and be successful, but he was trying to cheat the Country, and not pay for the many benefits he receives for being here. I told him that I was going to the federal building in the AM, and reporting this to the IRS. He must have been doing this quite a bit, because he damned near fainted. He offered to drop price by 25%, then 50%, then just cancel the entire bill. I told him my honesty could not be bought. I wrote him a check, and followed through with the IRS. They had an investigator contact me, and I gave them a disposition. A few months later, they contacted me and said a full investigation was underway. They told me, I could receive a reward for the recovered funds. I told them I did not do this for a reward, and they could just keep it. I do not like snitches, but I dislike cheaters even more. I am sure none of us like the way our tax dollars are wasted. But, we are all in this together. If I cheat on taxes, I just disrespect my fellow countrymen.
Liberal AND Proud @ 49:
There is no capitalism today and I understand that- what we have today is corporatism and THAT is based on greed. It is anathema to the free-market. Many big businsses constantly lobby for more regulations, restrictions, and subsidies to make it harder for competition to prop up.
All the laws in this country make it much more socialistic than it is free-market. It is annoying to see the blame continued to be placed on the free-market/capitalism when we have NOTHING like it.
Theguy @ 51:
Semantics. "Needs" is the term used to define economics in terms of nature...need for food, sex, procreation. Animals have needs...as do humans...however, humans have more than natural needs....they have materialistic needs...and those are based on...GREED.
Liberal AND Proud @ 54:
You chose the $30,000 not to buy more food...you chose it to buy an Ipod instead of some other cheap MPEG player. Neither of which you "needed" anyway.
I know an awful lot of small business owners and I can safely say that not ONE of them makes over $250,000. And most are WELL under $100,000. Me thinks mcinsane and the rest of the rethugliscums have no idea what a small business even is.
Liberal AND Proud @ 54:
Just because YOU consider something materialistic or not is completely irrelevant. If someone wants to buy something that YOU consider to be unnecessary doesn't mean they feel its unnecessary. If it makes them happier than they were before then it means they are more well off. The economics you are talking about is not "economics in general" that's more a keynesian bent towards economics. If basic needs such as food/shelter were all that mattered then we wouldn't have a whole host of products that make us more well off than our ancestors- and allow the average person in this country to live better off than kings did in the past.
Does greed exist- sure- but that doesn't mean every single transaction that's based outside of food/shelter is based on greed.
Liberal AND Proud @ 55:
And what is your problem with that transaction? Do you not like the idea of people to have the freedom to choose what they can do with their wealth? If you think people shouldn't be buying iPods- well then its ok if you want to persuade them that its a bad idea- but what I am against(as is anyone who is for the free-market)is government legislation that would use FORCE to stop people from obtaining things that some people consider unnecessary.
Buying an iPOD does not make anyone greedy- if it makes someone happier to listen to music during their day- why would you be in opposition to that? This type of attitude comes off as very arrogant to me(don't mean any offense by it), because it seems like you think you are better than other people and can decide for them what's good or not.
McCain is correct.
Obama's policies are tax - spend-malaiss-terrorist coddling.
Obama is Jimmy Carter Junior.
A pussified ultra libby!
What would Zeus do? @ 32:
No shit. I'd like to see it. Last time I checked he didn't have the balls to take it that far.
Theguy @ 59:
Now the personal attacks...and calling me arrogant.
Guess it's my own fault. I forget that most people are incapable of dispassionate intellectual conversations and discussions of applied and unapplied theory.
Oh welllll.
Having had a small business for over 10 yrs ( service ) I would gladly of paid taxes on $ 250K net .
The problems with small business's are , if you can bill 50% of your time your doing good , and 75% of that goes to cost of goods sold ( cogs ) .
I have friends who years ago went into independent trucking , the old saying was work 80 hrs , bill out 40 hrs and get paid for 20 hrs .
It takes real backbone to run a small business , I might do it again , but only if I had a marketable item , instead of waiting for the next job to walk in .
As someone who is registered as a "sole proprietorship" small business that files as "an individual", I must assume that I am included in that 21.6 million, and I can assure you, I don't earn $250,000 a year. I'd be happy to earn 10% of that.
Liberal AND Proud @ 62:
I didn't intend to offend you- but I do think it does come off as somewhat arrogant for anyone to say that they know best what is necessary for someone to buy and what is not. I can let that go and continue on a real discussion. Would you mind ignoring that remark and respond to the rest of what I've said?
Carly talking about "small American business". During her tenure at HP, they outsourced tens of thousands of jobs to foreign owned corporations. Even the jobs that remained in the US continue to be with contractors under foreign ownership.
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