Saturday, October 8, 2011

To All Job Creators: Get To Work (Part 2)

Some Republican leaders won't stop claiming that the "job creators" will take a big hit if federal income taxes are increased for those whose income puts them in the top two tax brackets. We're talking about the loosely defined "small businesses" that are in the 33% and 35% brackets on their annual Form 1040s.

The real scoop is that the "job creators" generally are NOT the small businesses who pay taxes at those rates.

Raising taxes for the prospering businesses in those tax brackets won't really hamper job creation because these businesses generally aren't the ones doing the job creating.

For starters, less than 4% of small businesses would be affected by tax hikes in those brackets, according to the non-partisan Congressional Research Service.

          Note: Some of my talking points here are drawn from this CNN Money piece:
          See CNNMoney story by Charles Riley on Oct. 3, 2011

What kind of "small businesses" are we talking about when we talk about the "small businesses" who would pay more taxes if those two marginal rates were raised? Most definitely we're NOT talking about the American classic kinds of small businesses like hard-working entrepreneurs and Mom-and-Pop operations.

In fact, 80% of the increased tax revenue would be paid by "non-business" types of small businesses like doctors, lawyers and members of limited partnerships. Not too many "job creators" in that bunch.

In fact, about 80% of all tax-paying small businesses have no employees other than the owner. Not too many "job creators" in that bunch.

In fact, the American classic "start-up" small businesses are the ones who create most of the new jobs---but they're also responsible for substantial job losses, because start-ups are notoriously prone to fail quickly. Not too many permanent, net new jobs created by that bunch.

"It turns out most of the firms those pols define as small businesses don’t hire or invest very much at all.," according to Howard Gleckman, a resident fellow at the Urban Institute.

          See Gleckman's Sep. 27, 2011, blog "Small Business And Taxes: Not What You Think"

In fact, taxes on businesses---including the elusively-defined small businesses---are the lowest they've been in decades.

We all know business taxes haven't been raised since the financial collapse three years ago.

Memo to all job creators:


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