Washington, DC, October 10, 2012 --
The American Sustainable Business Council (ASBC), which represents small- and
medium-sized companies, calls on candidates for office to stop misleading
voters with bogus data based on inaccurate definitions of small business.
Specifically, a report commissioned by the National Federation of Independent
Business (NFIB) and the U.S. Chamber of Commerce, implied a complete falsehood:
that the top 3% of small businesses are responsible for more the 50% of jobs in
the United States.
“I’m incensed that a candidate for
office would use small businesses to mislead voters,” said Frank Knapp, Vice
Chair of ASBC and CEO of the South Carolina Small Business Chamber of Commerce.
“Small businesses are the engine of our economy, not a way to score points in a
debate.”
In the first Presidential debate last
week, much discussion focused on the potential impact of tax policy on small
businesses. But there was a dispute over the definition of small business, stemming
from the NFIB/U.S. Chamber report.
ASBC contends that careful reading of
the report shows that attribution of jobs to small businesses was made not to
the top 3 %, but to all businesses that the report the report defined as small.
Therefore, the statement that the top 3% of small businesses employ 50% of US
workers is false.
Further, the report’s definition of
small business was itself erroneous:
·
The report defines
a small business by its corporate tax structure (S-Corp, LLC, Sole
Proprietorship)
instead of the most common definition of fewer than 100 employees.
·
The report
incorrectly equates individuals with any amount of taxable business
pass-through income from an S-Corp or LLC with small business owner/operators
who make hiring decisions.
“Under this wrong definition of small
business, all of the big accounting firms, with
tens of thousands of employees each, and some massive global companies like Cargill,
would be considered ‘small,’” said Scott Klinger, Tax Policy Director for ASBC.
“It would be misleading to say you are proposing tax policy to help small
business if you are using this definition.”
“NFIB
claims to represent me, but I’ve never heard from them and they’ve never asked
my opinion,” said Josh Knauer, President and CEO of Rhiza
Labs.
“My company was recently named one of Pittsburgh's 10 fastest-growing tech
companies. We have directly benefited
from the tax dollars that went into the research that created Internet
technologies long ago. This country needs to invest more in basic research to
plant the seeds for the next inventions that will change our lives in ways we
can't presently imagine. I never hear the NFIB talk about that.”
Dean Cycon, CEO of Dean's
Beans Organic Coffee, in Orange, Massachusetts, does know NFIB.
"They tried to get me to sign up with them,” he said, “but it was
clear that they represented a political agenda, not a small business agenda. I
told them to take a hike. So it was shocking to hear them quoted so much in the
recent debate, as if they were some sort of neutral, authoritative body. They
are neither."
The
American Sustainable Business Council and its member organizations represent
more than 150,000 businesses nationwide, and more than 300,000 entrepreneurs,
executives, managers, and investors. The non-partisan council includes chambers
of commerce, trade associations, and groups representing small business,
investors, microenterprise, social enterprise, green and sustainable business,
local living economy, and women and minority business leaders. ASBC informs and
engages policy makers and the public about the need and opportunities for
building a vibrant and sustainable economy. www.asbcouncil.org
###
Editor’s notes:
The NFIB-commissioned report (July 2012) implies that job figures apply to business
owners paying taxes in the top-two tax brackets (the top 3%). It cites an April 2011 E&Y report, which instead clearly says that all "flow-through businesses" employ 54% of the private sector
workforce.
Since the issue is tax policy impact on small
business:
·
The nonpartisan Joint Committee on Taxation estimated that only 3 percent
of small business owners who pay pass-through taxes do so in the two highest
income brackets. The Center on Budget and Policy and the Tax Policy Center have
each reported that the percentage of business owners likely affected by the tax
hike would be even smaller (CBPP), as low as 1.5 percent (TPC).
The 3 percent of “small business owners” who would see tax increases
include many individuals who play no role whatsoever in running a business or
who receive business income from “businesses” that have no employees.
The 3 percent includes:
•
Individuals who are only passive investors. A Treasury analysis found that on average “small
business” filers with total incomes over $200,000 get less than a sixth of
their total income from a business.
•
Individuals who obtain income from businesses that are not
small or are only investment vehicles and have no employees. Contrary to claims
that the tax increase under the President’s proposal would fall mostly on job
creators, the same Treasury study found that only a minority of the filers with
business income who would see a tax increase obtain any of that income from a
small business with employees.
•
Law firm partners, hedge fund managers, and other highly
compensated professionals who typically organize their businesses as
partnerships. Over half of the 400 highest-income taxpayers in the country have
some business income and therefore are counted in the 3 percent.12
•
Wealthy individuals whose “small business” is renting out
their vacation home or other property.
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