Ed Andrews hears the Republican argument against letting the Bush tax cuts expire for those making over $250K per year and finds it thin.
Hassett re-launches the Republican factoid that about half of all business income reported on individual returns goes to people in the top tax brackets. The counter-factoid is that 97 percent of people who report business on their personal returns don't make enough money to be affected by the higher rates.I've worked in small businesses my entire career except for that three-year stretch working for a defense contractor in the 1970s. Not once have I ever worked for a small business that even came close to paying out over $250K in net income to its owner. The business itself might have had much greater net income, but it was plowed back into the business. Even when I've been self-employed as a sole proprietor and worker bee I never came close to that number. When you hear Republican politicians wail and gnash their teeth about the evil done to small businesses by allowing those tax cuts to lapse, ignore them. They're playing to their base at the Chamber of Commerce and the National Federation of Independent Business. Posted by Linkmeister at September 5, 2010 08:42 AM | TrackBack[snip]
In any case, what Republicans call "small business income" covers many things: income from limited partnerships (real estate, oil and gas or a chain of fast-food franchises); earnings from professional corporations for doctors, dentists and lawyers; income from trusts; rental income from vacation homes and commercial real estate. These aren't necessarily family businesses or risk-taking entrepreneurs. A lof of these taxpayers are simply high-income professionals or very wealthy people who earn streams of income from many different investments. There's nothing wrong with those people, but nothing particularly sacred about them either.
He cooks up a handwave by claiming people in commercial real estate (to use but one example) "aren't necessarily risk-taking entrepreneurs" -- which is an abject joke if you've been paying attention to the commercial real estate market.
And then he utterly ignores the thrust of Hassett and Viard's argument, contained in this paragraph:
The numbers are clear. According to IRS data, fully 48% of the net income of sole proprietorships, partnerships, and S corporations reported on tax returns went to households with incomes above $200,000 in 2007. That's the number to look at, not the 3%. Would Mrs. Pelosi and Mr. Biden deny that the more successful firms owned by individuals in the top income-tax bracket are disproportionately responsible for investment and job creation?
I was checking his biography; not a word about any companies he's actually founded or positions of fiscal responsibility he's had. But boy, has he had some important posts in media, working for the New York Times as a business, economics, and technology reporter. Must be very comfy if you can sit on your pedestal and thunder about how others, risking their own capital, aren't sufficiently entrepreneurial (read: interesting to the author).
And by the way, I have worked for an S corporation, and I have written large checks to the IRS and the California Franchise Tax Board on income I haven't seen dime one of, save as salary. As a partner in an S corporation, I had an "income" many times my nominal one -- almost all of which was plowed back into employee salaries. See? Anyone can argue from anecdote. Would would impress me more is seeing the number of jobs directly attributable to S corps and how the coming tax increase will affect those companies.
Posted by: Rob McMillin at September 5, 2010 12:31 PMThat last sentence should start, "What would impress me more ...".
Posted by: Rob McMillin at September 5, 2010 12:34 PM