For months and months (and months), everyone in the Republican Party claimed that if the Bush tax cuts — expiring by Republican design (that is to say, as a result of legislative games played by Bush, et al) — were not extended for the top tax brackets, economic recovery would be jeopardized because small businesses would just get hammered, and they would naturally stop hiring and expanding, and would just generally lose interest in the profit motive (just like they had done in the days of Clinton, when we had the same tax rates, or in the days of Reagan, when rates were even higher).
Then it turned out that less than 3% of small businesses would be affected by letting the Bush-era tax rates expire for the top tax brackets. For an impressive period of time, that didn’t matter a bit to Republican leaders and spokesmen. They kept on cheerfully repeating the claim that small businesses would get hammered, and the economic recovery would be jeopardized. Because, let’s face it, for a very long time now — at least since the inauguration of George W. Bush — the Republican Party has simply not cared whether the things they repeat to the American people ad infinitum are true or not. And because, let’s go ahead and face it again, they knew perfectly well — as they have known for a very long time now — the media was never going to call them on their flat-out misrepresentations.
Then, for some strange reason — which may have to do with how a prolonged orange tan affects the functioning of the human brain — House Minority Leader John Boehner unexpectedly conceded that the 3% figure was true. According to him, though, that was really an irrelevant detail:
BOB SCHIEFFER: Now let me just say this. The– the Joint Committee on Taxation, which is a– which is a non-partisan body, says that only three percent of those small business people you keep talking about all the small business people, they’re going to get taxed, only three percent would– would be affected by that. Do you quarrel with that figure? Is that a right figure or a wrong figure?
REPRESENTATIVE JOHN BOEHNER: Well, it may be three percent, but it’s half of small business income. Because, obviously, the top three percent have half of the– the gross income for those companies that we would term small businesses.
The question that naturally arose was: if the top 3% of “small business” generated half of all small business income, then how small really could these so-called small businesses be? And Boehner seemed to underline the incongruity by using the language he did: “those companies that we would term small businesses”.
So intrepid journalists have now diligently researched the issue. Some of the results are truly surprising.
The thing is, some of those businesses are not particularly small. In fact, they’re quite large.
Among the firms Republicans want to protect from new taxes, according to research by House Democrats: The management team at Wall Street buyout firm Kohlberg, Kravis and Roberts (KKR), which recently reported more than $54 billion in assets managed by 14 offices around the world. Auditing firm PricewaterhouseCoopers, a household name with operations in more than 150 countries. And the Tribune Corp., which owns the Chicago Tribune, the Los Angeles Times and the Baltimore Sun.
Added Rep. Chris Van Hollen (D-Md.), a member of House leadership who heads the committee charged with electing House Democrats: “Republicans are trying to disguise this issue as a small business issue when the facts tell a different story. Among the major beneficiaries are hedge funds, billion-dollar private equity funds, major Washington lobbying firms and other million-dollar special interests.”
Senate Republican leader Mitch McConnell says President Barack Obama wants to subject half of all small-business income to a tax increase, a move that he says would strike a blow at the U.S. job-creation engine.
McConnell’s numbers add up only if you consider people like billionaire investor George Soros, most movie stars and Obama himself small-business owners, tax experts say.
That’s because the lawmaker is basing his figure on a broad definition of the term that experts say includes authors, actors and athletes who employ few if any workers. It also encompasses businesses that many people wouldn’t consider small, such as Soros’s hedge-fund firm and major law partnerships.
“Every student who is a part-time Web designer, partner in a law firm with a billion dollars of revenue and investor in a hedge fund gets lumped together in the data, along with real small businesses,” said Edward Kleinbard, a former staff director of the congressional Joint Committee on Taxation and now a law professor at the University of Southern California. “We are being over-inclusive in our use of small-business income.”
(Note: The title was revised after the post was published)