McCain and Palin's claims' that 16,000,000 small businesses will be negatively impacted by Barack Obama's tax plan is absurd. Now I know that I am preaching to the choir here but I felt compelled to discredit not only McCain and Palin, but also that lying fraud Samuel Wurzelbacher, AKA "Joe the Plumber".
As of 2002 there were only 5,697,759 employer-based firms in the entire United States of America which is roughly only a quarter of all small businesses. There is actually three times more self-employed people in America---almost all of them make much less than $250,000.00 annually.
In 2005 the number of employer-based firms approached, but was still shy of, 6,000,0000. As of 2005 there were over twenty million non-employer-based firms which again on average earned far less than $250,000.00 per year. (Note I could not locate the complete data set from 2005 for this post.)
Thus, with great certainty I can say that McCain and Palin are simply lying when they trump up their attack that 16,000.000 small businesses will be hurt by Obama's tax plan.
Here are my sources: |
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- http://www.census.gov/epcd/www/smallbus.html
- http://www.sba.gov/advo/research/us_05ss.pdf
- http://www.sba.gov/advo/research/us88_05.pdf
- http://www.irs.gov/publications/p535/index.html
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2002 Small Business Statistics (Source: census.gov) |
Number of Emp | Number of Firms | % of All Firms | Annual Receipts | Average Annual Receipts per Firm | Annual Payroll | Average Annual Payroll per Firm | 0 | 17646062 | 78.23 | 770.03B | 43638 | NA | 0 |
1 to 4 | 2695606 | 11.95 | 937.53B | 347801 | 155.66B | 57747 | 5 to 9 | 1010804 | 4.48 | 888.34B | 878847 | 182.38B | 180434 | 10 to 19 | 613880 | 2.72 | 1085.60B | 1768417 | 241.41B | 393254 | 20 to 99 | 508249 | 2.25 | 2884.70B | 5675755 | 623.71B | 1227186 | 100 to 499 | 82334 | 0.37 | 2547.42B | 30940120 | 535.75B | 6507032 | 100 to 499 | 22556935 | 100.00 | $8313.62B | $368561 | $1738.92B | $77090 |
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Key figures: |
- Almost 80% (78.23%) of all small businesses do not employ staff
- Average receipts for the self-employed is $43,638.00, thus they would be eligible for a tax credit.
- Average small business has annual receipts of $368,561.00
- After payroll is deducted from annual receipts $291471.00 remains
- $41,471.00 is the difference above Obama's $250K tax exempt threshold
In an average case, payroll (e.g. $77090.00) would be subtracted along with with cost of operations excluding payroll (supplies, expenses, etc.) from business income. If the cost of operations reaches 11.3% of average receipts (e.g. $368561.00 x 0.113 = $41,647.00) that business would not be subject to a tax increase under Obama's proposed tax plan, provided that all operating expenses are fully deductible.
Based on the data above, I would venture to say that 90% of small businesses (i.e. those with 4 or less employees) fall into the category of making less than $250,000.00 taxable income right off the bat. Of course there will be outliers in this group but I would argue that not only would they be negligible percentage-wise but also that they would be offset by outliers in slightly larger-sized businesses that do not net more than $250,000.00 annually. Couple that with the fact that larger small businesses are in many cases corporations in which no one is able to claim the income of the business as personal income.
Invariably, some small businesses that net over $250K will get their overage taxed if they are not smart but I expect those to be a negligible percentage. With that said, I am certain the number of small businesses to be levied extra taxes under Obama's plan will not come close to being 16,000,000 companies as purported by McCain and his surrogates. I would argue that the number is less than 50% of the businesses that hire between 5 and 499 employees.
Being from the Commonwealth of Virginia which is a key battleground in this year's election I am doing whatever I can to educate and persuade any and everyone within my reach to elect Barack. I implore all of you to use your knowledge of the issues to enlighten people within your sphere of influence every day between now and election day.
Are any of you well versed in Health Care? I would love to see McCain's Health Care plan dissected by just another average "Joe the Democrat". |