End tax cuts for the wealthiest

This afternoon President Obama will hold a press conference to talk about growing the U.S. economy and reducing the deficit.  He will certainly address the fictitious “fiscal cliff” you’ve heard so much concern about.  You can watch it live here.

The talking point on this scary fall is that the country’s economy will dive into a recession on January 1 if we don’t take action by the end of the year.  The truth is that Congress can act on all the fiscal issues involved in the early part of January and the average American won’t feel any pain. (Wall Street investors will make all their money back from any stock losses during December so don’t cry for them.) 

We aren’t in jeopardy of falling off a cliff.  It will be more like a slow motion rappel down the hill with a secure harness allowing us to zip right back to the top when compromise is achieved.

We can expect the President to talk about the Bush-era tax cuts that are set to expire for everybody on December 31^st.  The President ran on the pledge to only allow these tax cuts to end for individuals making over $200,000 and joint filers making over $250,000 a year. 

The controversy over this tax policy has been going on for several years.  My first opinion editorial in The Hill ran in September 2010.  The message was very simple then as it is now—end tax cuts for the wealthiest.

The Hill's Congressional Blog
September 23, 2010

End tax cuts for the wealthiest

By Frank Knapp, Jr.

The Board of Directors of The South Carolina Small Business Chamber of Commerce voted this week to support the effort in Congress to end tax cuts for the very rich. Here’s why.

First, letting the tax cuts for the top two income brackets expire will impact very few real small business owners. The reality is that almost all small business owners are middle-class Americans with middle-class incomes. Of those who aren’t, more small business owners are lower income than upper income. Only two to three percent of tax filers who claim income from a business make over $250,000 a year. Many of these people are wealthy passive investors or part of large corporate law and accounting firms who invest in financial and real estate partnerships — not hands-on small business owners.

While big business CEOs, Congressional lobbyists, Wall Street bankers, some attorneys and other professionals will lose their tax cuts on the portion of their incomes that is over $250,000 (they keep the tax cuts on the portion under $250,000) — the vast majority of small business owners will not be impacted at all.

Second, if our government is going to borrow $700 billion from China and other nations, using it to cut taxes on the very rich is an extremely counterproductive way to put American’s back to work and grow our economy.

The Congressional Budget Office this year looked at 11 policy options in terms of boosting small business and creating local jobs. It found that keeping the tax cuts for the top two income brackets was the least effective because higher-income households simply don’t spend as much of their income as middle and lower-income households. Remember — spending money in your local economy helps small businesses, not sending checks to hedge funds or putting money into “too big to fail” banks that favor quick buck speculation at the expense of Main Street investment.

Instead of handing more money to those who won’t create main street jobs, the money would be better used to help the real engine of our economy — the small businesses that create most of our new jobs. We should be stimulating more customers for our small businesses through infrastructure projects and keeping teachers and law enforcement officers working. We could also be giving incentives to small businesses to start hiring again by reducing their payroll taxes or other measures. And we can do all of this for a lot less money and reduce our nation’s deficit at the same time.

Allowing the tax cuts on the top two income tax brackets to expire and putting the money into more productive “job creating” or deficit reduction uses is the right business decision for our country’s small businesses and our nation’s economy.

Frank Knapp, Jr. is the President & CEO of The South Carolina Small Business Chamber of Commerce.


Source:
http://thehill.com/blogs/congress-blog/economy-a-budget/120545-end-tax-cuts-for-the-wealthiest

NFIB exposed…again

The first time I mentioned Bill Dunkelberg in my blog was two years ago.  Mr. Dunkelberg is the chief economist of the National Federation of Independent Business (NFIB), Professor Emeritus of economics at Temple University and chairman of Liberty Bell Bank in New Jersey. 

Unfortunately, in spite of all those distinguished positions, Mr. Dunkelberg is not a very good prognosticator and certainly not a friend of the nation’s 30 million small businesses.

In 2010 he led the NFIB’s PR campaign against the Small Business Lending Fund the Obama Administration wanted to create in order to encourage community banks to start making small business loans.  Mr. Dunkelberg said that passage of the Lending Fund would lead to “bad loans” that would result in the same kind of financial collapse that resulted from the housing bubble.

Well, the Lending Fund was established and while it has not been a great success in getting banks to meet the demand for small business loans, we also haven’t heard about bad loans threatening the entire financial industry. 

Last week Mr. Dunkelberg’s credentials as a small business advocate for the NFIB were again on display in an interview on WHYY, a Philadelphia public radio station, along with John Arensmeyer, founder and CEO of the Small Business Majority.

Mr. Dunkelberg made it painfully clear who he and the NFIB consider worthy small businesses.  Although there are 30 million small businesses in the country, only 6 million have employees other than the owner according to Mr. Dunkelberg and “those are the ones we worry about” he said.  The other 24 million sole proprietors he dismissed as “little businesses”. 

In Mr. Dunkelberg’s ivory-tower world, almost all the 6 million small-business owners that the NFIB “worries” about would pay higher personal income taxes if the Bush tax cuts end as scheduled for individuals making over $200,000 or joint taxpayers making over $250,000 a year.  Amazingly Mr. Dunkelberg proclaimed, “200-thousand.  250-thousand.  It’s hard to make a lot less than that.”

What?

In a national survey conducted by Lake Research last December for the American Sustainable Business Council, Main Street Alliance and Small Business Majority, only 3% of small businesses with employees other than the owner self-reported family incomes of over $250,000.  That is right in line with all other polling on this issue. 

If Mr. Dunkelberg is so wrong about the incomes of the vast majority of small-business owners, what else is he and the NFIB wrong about?

How about the demand for small business loans?  Since Mr. Dunkelberg is the CEO of a bank he should be an expert on this?

In the radio interview, Mr. Dunkelberg said, “When I talk to all these bankers across the country and also at our bank we find that for the most part that nobody wants more money.  The reason is we have more firms that think the economy will be worse 6 months from now than think it will be better.  We have more firms that think that their real sales will be lower six months from now than it is today.  And we have virtually nobody who thinks it is a good time to expand.”

No small business wants to expand?  No small business needs a loan?  Sounds like a typical bank CEO who listens only to other bankers and wants to sit on his money waiting for the perfect, no-risk small-business loan application.

But at least NFIB’s own survey of its members backs up Mr. Dunkelberg’s opinion.  In May 91% of NFIB members self-reported that they had all the credit they needed.  Only 3% said that financing was their biggest problem. 

However another survey in May by the National Small Business Association found that 43% of its members have wanted loans in recent years but couldn’t get financing.  In June Sam Graves, Republican Chairman of the U.S. House Committee on Small Business wrote, “One of the biggest issues faced by small businesses today is the inability to access sufficient credit and capital.” 

Not only is there demand for small business loans, contrary to Mr. Dunkelberg’s assertion, some small businesses are actually getting the credit they need.  A Gallup poll back in February found that 15% of small businesses were hiring primarily because of the need to expand their business operations and increased consumer demand.  But still not all of even these businesses were getting as much financing as they wanted.  The poll found that one third of the small businesses hiring were adding fewer employees than they needed.

Additionally, the Gallup poll disagrees with Mr. Dunkelberg’s portrayal of small business pessimism.  “Right now, economic confidence is approaching its highest levels in the last four years.  U.S. small-business owners are also about as optimistic about their business and their future hiring as they’ve been at any point during that time,” said Gallup’s chief economist. 

So small businesses are looking for financing, some are expanding and optimism is returning.

All of this means one thing.  Mr. Dunkelberg and the NFIB do not represent most small businesses in this country. 

Maybe the 300 to 350 thousand small businesses the NFIB claims as members consist of all the 3% of small-small business owners that take home over $250,000 a year.  And maybe these NFIB small-business owners don’t need any financing and maybe they are terrible pessimistic. 

But one thing is certain.  They and the NFIB don’t represent the rest of us.  

Déjà vu all over again…with a bad twist

Yesterday President Obama reiterated his position that he supports extending the Bush-era tax cuts for the lower 98% of all taxpayers for another year.  Of course, that also means that he supports allowing those same tax cuts for the top 2% of tax payers to revert back to the Clinton-era levels (you remember the 90’s when the economy was soaring and we actually had a budget surplus)—a position shared by most Americans.

Of course the President’s GOP opponents argue that all the Bush-era tax cuts should be extended because to do otherwise would cause the wealthiest to stop creating jobs. 

Sound familiar?  It should.  We’ve been having this debate since 2010 when all the tax cuts were set to end.  The South Carolina Small Business Chamber, the American Sustainable Business Council, Business for Shared Prosperity, the U.S. Women’s Chamber of Commerce and other business groups support allowing the tax cuts for the upper 2% to expire and to use the new revenue for deficit reduction and investment in the nation’s infrastructure, first responders and teachers.

I wrote about this issue in The Hill once in 2010 and again in 2011.  The point is pretty simple.  Very few small business owners (less than 3%) fall into the upper 2% tax brackets and many that do have some business income are K Street lobbyists, hedge fund managers, high-powered consultants, Wall Street bond traders and the wealthiest Americans.  They are not your Main Street small business people.

Plus, businesses do not hire workers based on the business-owners income tax rate.  Businesses hire workers when the demand is there for products and services. 

But here is the new twist to this old debate. 

The traditional line against the tax rates going up for the wealthy is that it would hurt the small business job creators.  This argument recognized that small businesses create most new jobs but distorts the reality of the income of small business owners.  As indicated above, very few have incomes that would cause them to see a tax increase if the Bush-era tax credits on the top 2 tax brackets increased.

But yesterday in a radio interview, Presidential candidate Mitt Romney said, “What the president is proposing is therefore a massive tax increase on job creators and on small business.” 

AND???  Is Mr. Romney now making a distinction between “job creators” and “small businesses”? 

I thought maybe he simply misspoke but Romney spokeswoman Andrea Saul also made the distinction yesterday.  “The president’s latest bad idea is to raise taxes on families, job creators and small businesses,” she is quoted as saying.

This is apparently now the official position of the Romney campaign.  Small businesses are now not to be recognized as the same as job creators. 

Why is this important?  Because one of the few things small business has going for it in government is the deserved reputation as job creators.  But even with that we still don’t get the respect we deserve from government which at all levels heaps attention and incentives on big business while giving crumbs to small business.

If there is now an official effort to decouple job creator status from small businesses, we are in deep trouble.  The billionaires and multinational corporations that are trying to buy this election to totally control our economy and government will have driven the final stake into our hearts.

Let upper-end Bush-era tax cuts expire

By Frank Knapp, Jr.
The Hill's Congress Blog
September 21, 2011

 

President Obama’s call for cutting the deficit by $3 trillion includes the roll back of the Bush-era tax cuts on the top income tax brackets, a move expected to bring in about $800 billion over the next 10 years.

As expected the defenders of the wealthiest two percent of taxpayers, such as Speaker John Boehner, trotted out their bogus criticism of the proposal saying that it hurts small businesses, the “job creators”.

First, the data clearly shows that only 2 to 3 percent of tax filers reporting some income from a small business have family incomes of over $250,000 a year, the filers who would be impacted by the proposal. This minority of “small business owners” consists largely of very successful attorney’s, physicians, hedge fund managers, K Street lobbyists, high-powered consultants, Wall Street bond traders and the country’s wealthiest millionaires.  An incremental tax increase on these Americans will not affect the number of employees they hire one bit.

But while the critics of President Obama’s plan are disingenuous as to who it would impact, at least they continue to remind the public that most net new jobs are in fact created by small business.  Now if they would only support proposals that directly target small business for assistance.

When the President announced his jobs plan earlier this month, my reaction was, “Finally, a jobs plan that actually helps the largest jobs-producing sector to create jobs—small business.”

It was not just another trickle-down proposal for job growth.  The American Jobs Act would infuse money into Main Street by putting more dollars in the hands of consumers, cut payroll costs for small businesses to help their bottom line and reward small business with tax credits for hiring the unemployed especially veterans.

Tax credits for small businesses creating jobs is a particularly sound government policy.  It’s not a tax cut for big business and cross your fingers that they will hire.  It’s a tax credit that a small business gets only if it hires a new employee under specific conditions.  No hiring, no expenditure of government funds.  This is a common sense job creation proposal.



Unfortunately, Mr. Boehner did not endorse any of these proposals to help small business in his subsequent speech at the Economic Club of Washington. In fact, Mr. Boehner disparaged the proposed job tax credits for small businesses saying that this would make reforming the “tax code more complex”.

It is time for Congress to put actions behind their loving praise for small business and quit holding us up as a shield to protect the wealthiest individuals and corporations.

Hands-on small business owners are not Lloyd Blankfein of Goldman Sachs who received $800,000 last year due to the upper-end Bush-era tax cuts; or Rex Tillerson of Exxon Mobil who netted $1.454 million in 2010 because of the tax cuts; or Rupert Murdoch of News Corporation who saved $1.2 million last year from the controversial tax cuts.

The CEO’s of the biggest multinational corporations are just some of this country’s wealthiest people who the President is asking to sacrifice just a little more so that the small business owners of the local retail shops, plumbing companies and restaurants can have more customers and create more jobs.


Mr. Knapp is the President and CEO of The South Carolina Small Business Chamber of Commerce.

Source:

http://thehill.com/blogs/congress-blog/labor/182961-let-upper-end-bush-era-tax-cuts-expire

Deficit reduction achieved

We’ve found the solution to decreasing the country’s deficit spending—more revenue!

According to a report yesterday from the U.S. Treasury Department, the federal government decreased deficit spending by 6% ($70 billion) in 2011 to date compared to the same period in 2010.  If we continue to do that for the rest of the year that will mean we reduced the anticipated deficit by $120 billion in 2011--all due to more revenue coming in and not from cutting any spending that will hurt Main Street’s economy.

Extend this trend line out for the next decade and we will have cut the projected federal deficit by $1.2 trillion.  All the Congressional  deficit-reduction supercommittee, scheduled to find $1.5 trillion in reduced spending over the next 10 years, needs to do is find some additional revenue. 

No problem.  Make the multinational corporations pay their taxes by ending offshore tax have abuse or let the Bush tax cuts on the wealthy expire and “poof” the job is done.    

But there is another way we can do even more deficit reduction as the Treasury news indicates—create more revenue by creating jobs.  More people working means more workers paying taxes. 

That’s exactly why U.S. Representative John Larson of Connecticut wants to create another “supercommittee” for job creation.  He plans to do this next month by introducing an amendment to the legislation creating that other supercommittee.   

More jobs also mean more consumers for our small businesses.  That’s what we really need to grow our economy back to a balanced budget.

Identifying real small-business owners

Remember the big fight late last year over extending the Bush tax cuts on the wealthiest Americans.  Those wanting to keep the cuts argued that small business owners would be hurt because many or most of them had individual taxable incomes of over $200,000 or joint incomes of over $250,000.  Tax these people more and they’ll stop creating jobs.

Those of us who argued that very few (possibly only 2 or 3 percent) of real small business owners made that kind of income pointed out that the federal government needed the additional revenue either to fund job-creation or reduce the deficit.  I described the vast majority of upper income folks who Bush tax cut supporters claimed were small business people this way:

Very few of them are what most would consider small business owners. They include partners in large corporate law firms, hedge fund managers, K Street lobbyists, high-powered consultants, Wall Street bond traders and the country's wealthiest millionaires -- all of whom claim some business income and thus are counted in IRS eyes as small businesses. These aren't "mom and pop" businesses, says Adam Looney, senior fellow at the Brookings Institution.

Now a report from the U.S. Treasury looks to better define exactly who is a small business person.

According a story in The Hill today by Bernie Becker, under the usual criteria anybody who reports pass-through income on their personal taxes was considered a small business person.   Using this definition in 2007 there were 34.7 million small-business owners.

So how many of these 34.7 million were not really small business-owners as we know them?  To look at that Treasury developed two methods to ferret out the small-business imposters.  One way was to say that more than $10 million in “small business” income or deductions kicks you out of the small business category.  This culled out 14.7 million pretender small-business people—those the proponents of keeping the Bush tax cuts for the wealthy love to claim are just your average Main Street business folks. 

When the Treasury defined a real small-business person as one who claims at least 25 percent of their adjusted gross income from a small business, only 12.9 million taxpayers remained. 

The fight over keeping the Bush tax cuts (set to expire at the end of next year) for the top two income brackets will start again with the new Congressional “Supercommittee” that is to address deficit reduction.  These new Treasury definitions and data will hopefully dispel the bogus arguments for keeping them.

Fair and balanced???

The FOXNews of budget agreements. That’s the best description of the debt ceiling compromise passed by the House yesterday and by the Senate today.

No matter how many times FOXNews calls itself “fair and balanced”, the hard evidence tells the real story of slanted and faux news at the Murdoch network.

The same PR charade was used by President Obama to sell the bi-partisan compromise on lifting the debt ceiling. All his talk of a balanced approach that called for shared sacrifice for all turned out to be the equivalent of the “fair and balanced” FOXNews mantra.

The $1 trillion immediate deficit reduction in the agreement is all spending cuts. We’re told that the “balanced and shared sacrifice” part of deficit reduction will come from the special joint committee to be established to shave off another $1.5 trillion from the deficit. Don’t hold your breath.

The wealthy and multinational corporations have a firm grip on both parties (especially the Republicans) in Congress and the President. The big campaign contributions and highly paid Washington lobbyists will make sure that we don’t close the abuse of offshore tax havens by multinationals that will cost us $1 trillion in lost revenue over the next 10 years. Another $700 billion over the next decade will be lost because we won’t ask the wealthiest in the country to simply pay the same level of taxes from the 90’s (the last time we had a balanced budget).

And while the wealthiest Americans and multinational corporations are required to sacrifice, the rest of us, small businesses and our whole economy will feel the pain of our sacrifice.

I spoke with Christian Dorsey of the Economic Policy Institute yesterday. His organization projects that just with the first $1 trillion in spending cuts our nation will lose up to 2 million jobs over several years. The reason—unemployment benefits won’t be extended and the payroll tax holiday will end. That will mean a lot less money flowing into the pockets of consumers who will then spend less. Less consumer spending means hard times for small businesses and fewer jobs.

Add another $1.5 trillion in spending cuts according to this deal and here comes another recession. The wealthy will survive just fine and so will the multinational corporations. The rest of us—not so much.

Rejecting NFIB spin

I met Zach Carter, a young journalist with the Huffington Post, back in April.  We had lunch at a trendy deli in DC with David Levine (American Sustainable Business Council), Scott Klinger (Wealth for the Common Good) and Chuck Collins (Institute for Policy Studies).  While we couldn't get Zach interested in writing about tax haven abuse, he jumped on the idea that small businesss supported ending the Bush-era income tax cuts for the wealthiest Americans.  Below is Zach's story.
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Huffington Post
Zach Carter
May 4, 2011

Small Business Owners Demand Repeal Of Bush Tax Cuts For The Rich

WASHINGTON -- Michael Teahan, like his father, mother, and uncles before him, is a small business owner. The 52-year-old has spent most of his adult life running his own businesses: a restaurant, a coffee bar and various companies involved in the espresso machine business.

"I was the only person in my family to go to college, because that’s not what we did -- we all opened up businesses," Teahan says. "For some people, that’s a big hurdle ... for us, it was like having lunch."

Teahan currently operates Espresso Resource, a company that imports espresso machine parts from Europe to sell to U.S. restaurants and coffee shops. And he’s doing very well for himself: The two-man operation clears about $1 million a year in total sales, Teahan says -- enough to secure himself annual income in excess of $250,000.

That makes Teahan one of the few small business owners to actually benefit from the Bush administration's tax cuts for the wealthy. He says the cuts save him about $12,000 a year, compared to what he paid before they were enacted. But as debates over the federal budget deficit have intensified, Teahan has found the political discussion increasingly divorced from the reality of his experience as a small business owner.

Tax cuts for the wealthy, according to Teahan, will do nothing to bolster his firm. They won’t affect his hiring decisions, they won’t encourage him to buy new equipment or help him move into a bigger warehouse. He says all of those decisions -- the nuts and bolts of actually running a small company -- depend on the his customers' economic conditions, not his personal tax rate.

"What we do in business, how we spend our money, how we allocate our resources -- that has very little to do with tax policy," Teahan says. "I map my business based on my customers, and what my customers want to buy, and what they can afford to buy."

It’s a common complaint from small business owners. While congressional Republicans and entrenched corporate lobbying groups like the U.S. Chamber of Commerce -- which is holding a Wednesday meeting on small business priorities -- and the National Federation of Independent Business (NFIB) have been pushing hard to preserve the Bush tax cuts for the wealthy by touting the interests of small firms, much of the small business community is demanding that those very tax cuts be repealed. The tax breaks for the wealthy will add $700 billion to the debt over the next 10 years, according to the White House's Office of Management and Budget. And many small firms say that money would be better spent on direct aid to the middle class.

"We are fed by our consumers, not by our tax breaks," says Rick Poore, owner of Designwear, Inc., a screen-printing business based in Lincoln, Neb. "If you drive more people to my business, I will hire more people. It's as simple as that. If you give me a tax break, I'll just take the wife to the Bahamas."

Poore emphasizes, however, that -- like the vast majority of small business owners -- he isn't among the elite class of taxpayers making $250,000 a year or more. He and his wife take in a combined $80,000 a year from their business. Teahan is an outlier, because most small businesses don’t make nearly enough to benefit from the Bush tax cuts for the wealthy.

"Most small business owners make less than $250,000 and so the tax cuts don’t benefit most of us, and they’re really taking important valuable resources away from the federal budget," says ReShonda Young, corporate vice president and operations manager for Alpha Express, a Waterloo, Iowa-based company that specializes in transportation services and snow removal.

Young also serves on the executive board of Main Street Alliance, a coalition of small firms. Main Street Alliance notes that 98 percent of small businesses will not be affected by the Bush tax cuts in any way.

"The reality is that most businesses don’t pay the top marginal tax rate,” notes John Irons, an economist with the left-leaning Economic Policy Institute. "Most small businesses won’t be affected at all by a reversal of Bush tax cuts for the rich.”

For his part, Poore, the screen-printer, sees some dark humor in the entire notion of wealthy small business owners. He says that any accountant "that allows $250,000 in profit to get through to my bottom line would be fired."

Teahan emphasizes that even the few firms that do qualify for the Bush tax cuts don't boost their hiring in response to the Bush tax cuts. For decades, small companies have been able to secure tax breaks on the expenses that actually affect their bottom line -- labor, rent, equipment and other necessary costs. The Bush tax cuts for the wealthy, by contrast, only affect how much of a firm's total profit owners keep for themselves.

"The economic premise, that people won’t hire because they might have to pay more taxes if they make more money, is beyond laughable,” says Lew Prince, owner of the Vintage Vinyl record store in St. Louis, Mo. "You hire when you think there’s a way you can make more money with that hire. The percentage the government takes out of it has almost nothing to do with it.”

So what really affects small businesses? High health care costs, which will likely be ameliorated by President Barack Obama’s health care reform, and limited access to credit in the wake of the financial crisis. Just as important to Teahan, Poore, Prince and other small business owners are federal economic policies that directly benefit their middle class customers. If extending tax breaks to millionaires means denying aid to the middle class, their firms will suffer.

"My customers work for a living,” Teahan says. "They’re working on espresso machines and selling coffee. They’re not these uber-rich Wall Street bankers. [My customers] need the money. If they’ve got money, then I'm doing great."

The upper-end Bush tax cuts are not corporate taxes -- they’re taxes on wealthy individuals. Many small firms are not corporations, and owners report their profits as the individual income of their owners. Some firms, like Teahan’s, choose to incorporate, though they never officially report a profit because all excess earnings are paid out to the owners.

The U.S. Chamber and the NFIB say that, because these business profits are reported as individual income, allowing tax hikes for wealthy individuals will hurt small business. The U.S. Chamber declined to comment for this story but NFIB spokesman Kevan Chapman says his organization has repeatedly polled its members and found that they favor the Bush tax cuts.

"We have over 300,000 members who would disagree with the notion that we don’t represent small business. The last time we balloted this measure was in November, and 89 percent said the federal government should extend those tax breaks," Chapman said.

There were 26.9 million small businesses in the United States in 2008, according to the Small Business Administration, though that figure includes millions of people who work on contract for employers but have no business, in the traditional sense, of their own. There were 6 million small firms with at least one employee.

Another small business groups beg to differ with the NFIB. The American Sustainable Business Council, which represents 70,000 small firms and social groups, maintains that "there is a strong business case for letting the tax relief for the wealthiest expire,” noting that doing so would "reduce the federal budget deficit and lessen the crisis with state and local budgets around the country.”

Frank Knapp, president and CEO of the South Carolina Small Business Chamber of Commerce has written on the Bush tax cuts issue for The Huffington Post. He emphasizes that many of the people who report business income on their personal income tax returns are bond traders, partners in corporate law firms, lobbyists and hedge fund managers -- not the kind of activity that most people think of as "small business.”

These alternative small business groups say that the debate over the Bush tax cuts has been heavily skewed by talking points from the NFIB and the Chamber. The Chamber has a long track-record of backing the economic priorities of corporate elites, while the NFIB has increasingly become a partisan wing of the Republican Party, as HuffPost detailed in January.

While the NFIB continues to support the indefinite extension of the Bush tax cuts for the rich, it opted last year not to fight for a bill that would expand lending to small firms.

"Any small businessman who is in the NFIB is paying his enemies to stab him in the back,” says Prince, the record store owner.

Alpha Express VP Young agrees. "It's the corporate interests and the wealthy stealing our name to further their agenda," she argues.

While the upper-end Bush tax cuts would increase the federal debt by $700 billion over the next 10 years, the broader class of Bush tax cuts, which affect many middle-class taxpayers, would cost $3.1 trillion over the next decade, according to the Congressional Budget Office.

"We should have learned from the last decade that slashing taxes for the richest Americans is a great way to grow the national debt –- not jobs," says Holly Sklar, the executive director of Business for Shared Prosperity, a non-partisan small-business group funded predominantly by the Ford Foundation. "Few small businesses benefit from the top rate tax cuts, but many lose from a shrinking middle class and deepening budget cuts in everything from the Small Business Administration and education to vital infrastructure repair and modernization. The tax cuts are like termites, eating away at our economy and our nation’s future.”

http://www.huffingtonpost.com/2011/05/04/small-business-owners-bush-tax-cuts-rich-repeal_n_857204.html

Common Ground???

In his recent “60 Minutes” interview, incoming House Speaker John Boehner stated that he will refuse to “compromise” on his principles but is willing to find “common ground” on issues. So according to Speaker –in-waiting Boehner the $858 tax-cut package the Senate will pass shortly is “common ground” between Congressional Republicans, Democrats and President Obama.

How long the rank and file Tea Party folks are willing to swallow this “chicken crap” I don’t know. Their silence has been deafening on this GOP-caused deficit spending less than two months after the Tea Party apparently gave the Republicans the power to dictate all legislation in Washington.

I’m not saying that there aren’t some “common ground” parts of the Senate bill. But the biggest piece of the bill that was definitely “common ground” was extending the Bush-era tax cuts to all income under $200,000 for an individual and $250,000 for a joint return. Both the Republicans and Democrats said they wanted that. Had they just passed that, we could have limited our deficit spending to about 1/4th of what we will be borrowing from the Chinese under this bill.

But the GOP would have none of this unless income over those limits also got the tax cuts. So off to the deficit spending game we went.

Are there some business benefits in the Obama-GOP deal (oops, is “deal” too close to the word “compromise” for Mr. Boehner’s vocabulary)? Sure there are. But there are plenty of goodies in there that will help the economy (like extending unemployment benefits) and that won’t particularly help the economy (tax cuts for the wealthy and estate tax give-aways for multi-million dollar properties). Most of this was “compromise” regardless of Mr. Boehner’s objection to the term.

From the small business perspective, one truly “common ground” item not making it into the tax-cut package was the universally disliked 1099 IRS reporting requirement included the Affordable Care Act. This provision was estimated to bring in about $19 billion over 10 years to help cover the cost of the ACA. But all the business community and both parties agree that it will be a terrible hardship to comply with because it would require 1099’s for all business purchases of over $600.

According to yesterday's story in POLITICO, Republicans rejected this “common ground”. Just look at the total cost of the package and you know that a mere $19 billion more couldn’t have been the reason.

As my friend John Arensmeyer, CEO of the Small Business Majority, points out in a press release below—this “common ground” was grounded by partisan politics.

Political Gridlock Shouldn’t Hold Up 1099 Fix

Statement by John Arensmeyer, CEO, Small Business Majority

Dec. 13, 2010
Reports of partisan gamesmanship blocking the Senate from fixing the 1099 reporting requirement as part of the recent tax cut deal are not only discouraging but also infuriating. We’re disappointed there are those in Congress who would turn small businesses’ success into a partisan issue. There are millions of small business owners who need relief from this provision, which would place an onerous and unnecessary paperwork burden on them if it goes into effect in 2012.

The Patient Protection and Affordable Care Act has tremendous benefits for small businesses. The 1099 provision, which was included only as a revenue-generating measure, isn’t one of them. Lawmakers on both sides of the aisle agree this provision needs to be fixed, and more than 90 senators have voted to amend this part of the law. Yet it still exists.

It’s time for those preventing the 1099 provision from being corrected to end the political posturing. We urge all senators to look past their partisan differences and support small businesses by fixing this issue immediately.

Help stop a bad business decision—Join public briefing call today

This is a crucial week in Washington. Congress is back in session and the White House is holding a meeting Thursday with Congressional leaders to discuss issues.

One of the issues will be extending tax cuts to the wealthiest 2 percent of the taxpayers—tax cuts that will increase the deficit by $700 billion over the next 10 years and not be effective at all in creating jobs and helping small businesses.

How can you help stop this bad business decision?

Join me in a public briefing to learn more today at 2:45 p.m., sign a petition (see below) and call your elected officials. Thanks to Business for Shared Prosperity for their hard work and coordination on this effort.

JOIN THE BRIEFING CALL on Monday, Nov. 15 at 2:45 PM EST with Frank Knapp, CEO and President of the South Carolina Small Business Chamber of Commerce, and Steve Wamhoff, Legislative Director of Citizens for Tax Justice. Insight on the issues, legislative environment and tips for taking action.

► Call in #: (760) 569-7676, access code 818215. Monday, Nov 15 at 2:45 pm EST

SIGN/CIRCULATE PETITION: Urge Congress to let the high-end, budget-busting tax cuts expire for taxable income above $250,000.We can't afford to lose $700 billion to invest in small business job creation, education, health, infrastructure and renewable energy in the next decade.

► Sign the petition today

"Extending the high-end Bush tax cuts serves K Street lobbyists, not Main Street shop owners. Politicians should not use us to justify a very bad business decision." - Frank Knapp, CEO, South Carolina Small Business Chamber of Commerce.

TELL PRESIDENT & CONGRESS WHAT YOU THINK:

Sign the petition and follow it up with a personal call or letter for maximum impact.

► Phone the White House Switchboard 202-456-1414; Comment line 202-456-1111

► Congressional switchboard 202-224-3121.


► Write Your Senator at http://www.senate.gov/general/contact_information/senators_cfm.cfm

► Write Your Rep at https://writerep.house.gov/writerep/welcome.shtml

REPORT & TALKING POINTS: Restoring Top Tax Rates Makes Sense for Small Business.
 Our short report tells why it makes good business sense to reset top tax rates to where they were between 1993 and 2000 during the longest economic expansion in US history.

► Read the Report, Use the Quotes and Talking Points

GET YOUR VOICE IN THE MEDIA

► Press Release: Business Leaders Call on President, Congress to Let Bush’s High-End Tax Cuts Expire

► Letter to the Editor: Write a short letter to the editor responding (pro or con) to an article, editorial or op-ed you see. Refer if you can to Business for Shared Prosperity. Letters to the editor are widely read!

► Recent Press: Frank Knapp, We Didn't Vote for This, The Hill

► Talk to the Press: The more people involved, the more areas we can cover. Contact Bob Keener at bobkeener@businessforsharedprosperity.org or 617-610-6766.

Thank you for signing the petition, speaking out and spreading the word!

We didn't vote for this

The opinion editorial below ran on the Huffington Post and The Hill yesterday.
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We Didn't Vote for This

by Frank Knapp, Jr.

Whether Americans voted for Republicans or Democrats in the mid-term election, one thing is clear: Voters were demanding that Congress focus intensively on job creation on Main Street -- not lobbyists and campaign donors from big business and Wall Street.

Apparently, many in Congress and President Obama, if recent reports are true, either didn't get the message or simply don't care now that the voting is over.

The top legislative priority of the newly "Tea Party-empowered" during the lame duck session is hardly what Tea Party insurgents had in mind. The proposal is to (1) increase the national debt by borrowing $700 billion to $1 trillion over the next 10 years; (2) spend the money on big, non-job producing tax cuts for the wealthiest 2 percent of Americans; (3) use small business as the excuse.

This bad-business proposal is now being pushed in Congress and the media by those advocating extending the Bush-era tax cuts to the top two income brackets. While proponents acknowledge that less than 3 percent of the taxpayers who would receive the tax cuts actually have some business income, they insist that these approximately 900,000 taxpayers are the very successful small business owners who will stop hiring and purchasing if they don't get their tax cut. Wrong, wrong, wrong.

First, almost all real small business owners are middle-class Americans with middle-class incomes. Walk down any Main Street and you won't find small business owners netting over $250,000 a year in profit (dollars remaining after the cost of employee wages and other business expenses are deducted from taxable income).

These middle-income, Main Street small businesses are the ones we really need to help create the new jobs to lift us out of this down economy There is absolutely no evidence that the wealthiest small business owners create more jobs than those in any other tax brackets. As any small business owner knows, the number of employees does not correlate with profit.

So who are these mysterious high-income "small business" taxpayers in the top two brackets who Congress is considering borrowing hundreds of billions from foreign countries in order to give a tax cut?

Very few of them are what most would consider small business owners. They include partners in large corporate law firms, hedge fund managers, K Street lobbyists, high-powered consultants, Wall Street bond traders and the country's wealthiest millionaires -- all of whom claim some business income and thus are counted in IRS eyes as small businesses. These aren't "mom and pop" businesses, says Adam Looney, senior fellow at the Brookings Institution.

Not only are the vast majority of these 900,000 "faux" small business taxpayers not involved in job hiring decisions, the tax cut won't even cause them to significantly increase their personal spending to create the demand for new jobs.

The non-partisan Congressional Budget Office (CBO) evaluated 11 policy options in terms of boosting economic growth and creating jobs. It found that "policies that would temporarily increase the after-tax income of people with relatively high income... would have smaller effects because such tax cuts would probably not affect the recipients' spending significantly."

The wealthiest American's are more likely to save their money from a tax cut rather than spend it, according to Moody's Analytics, Inc.

If we really want to give a tax cut that will create jobs, then we could cut employer payroll taxes on businesses that actually increase their workforce. The CBO estimates this would have six to eight times as much job-creating impact as an income tax cut.
Alternatively we could create more customers for our small businesses through infrastructure projects, many of them long overdue upkeep or modernization, or keeping teachers and law enforcement officers working rather than laid off.  The policy the CBO found with the biggest bang for the buck is extending unemployment insurance -- a direct infusion of money into local economies by people buying for their basic needs.

Increasing the nation's deficit while not saving or creating jobs is just more politics as usual in Washington where those with the most money get rewarded with even more money.

Congress needs to hear this loud and clear. These high-end tax cuts serve K Street lobbyists not Main Street shop owners. Politicians should not use us to justify a very bad business decision.