One of the more frequent objections to the possibility of not extending the Bush tax cuts for the highest earners is the negative impact on small business owners. The meme generally cites some quasi statistics that range from 50-80% of the jobs in the US are generated by small business owners. So far, I don't disagree. The engine for economic growth in the US has always been highly dependent on the financial interactions of people in their local community.
But with the advent of the WalMart society, I would bet that the job generating figure has diminished as more and more mom and pop operations cease to exist when large corporations move into town, so to speak. We are inundated with chain operations all over the place..restaurants, drug stores, supermarkets, convenience stores, gas stations, you name it. With the exception of small towns and clusters of urban neighborhoods one would be hard pressed to see a strong vibrant economy based on small businesses.
Now, I am one lucky gal, because I live in an ethnic neighborhood about two blocks away from a a main drag that has 15 blocks of diverse businesses that make up our local economy. And since I have regularly had personal contact with many of the owners, both as a customer and an occasional office representative at our local community support organization, I decided to take a walk down the street the other day in search of those $250000+ earners.
Here is a listing of the types and corresponding number of privately owned businesses ....
Bakery 3
coffee shop 4
deli 2
florist 3
restaurant / cafe 4
beauty salon 3
barber shop 2
pizza shop 4
card & gift store 5
convenience store 3
funeral parlor 2
craft shop 2
clothing store 8
shoe store 3
bar / tavern 10
dentist / orthodontist 2
child care center 2
used car lot 3
real estate broker 2
savings and loan 2
butcher shop 2
art gallery 3
plumber / HVAC / home contracting office 4
laundromat / dry cleaner 2
pet store 1
tatoo parlor 1
law office 3
office equipment repair shop 1
home appliance sales & repair shop 1
veterinarian 1
podiatrist 1
bowling alley 1
massage parlor / tanning salon 1
martial arts studio 1
architect 1
custom furniture shop 1
accountant 1
If my addition is correct that adds up to 95 businesses that employ somewhere around a thousand people. There is a very diverse group of people as owners and employees. Some are businesses that have passed from one generation to another and some are brand new to the neighborhood. By and large the owners also work in their store and the vast majority of the employees are from the neighborhood. They are multi-cultural and some are even relatively recent immigrants...the veterinarian is from Mexico and one of the new bakeries is a young couple from France ( and their pastries are SO good that I know I'm going to gain weight this year...lol).
Anyway, I asked the small business owners one simple question, "Does your business generate over $250000 annually in taxable income?" Well, I got a lot of blank stares and some outright laughter. But not a single one of them answered in the affirmative. In fact, a good many said they were lucky if their gross revenue was over $250000 annually. Well, so much for the argument about this tax expiration is going to stifle job creation or cost jobs.
OK, so I said to myself...maybe I'm not being fair here, because this group was mostly "small" small business owners. So I thought about some of my friends and aquaintances who have medium and larger small businesses. So I made a few phone calls to the following...
Car dealership....2 siblings who inherited the business, employ 35 people altogether. They have NEVER generated annual taxable income individually over $250000.
Customized metal foundry....mother & son partnership, employ 18 people. Again, no annual individual income over $250000.
Auto service and towing company....father/son partnership, employ 21 people. Same story, no big income here.
Court reporting service company...single owner, employs over 40 people, some of whom only work part-time. This is a seriously growing business, less than 5 years old. Gross revenues are up significantly this year, but they might only crack $200000 this year in taxable earnings.
Door & window manufaturer...family owned, employs over 50 people. This is complicated because there are 3 generations, and they draw salaries, but with combined salary and profit distribution, the highest earner in the group made $216000 last year. And they added 4 employees this year to react to the demand based on goverment energy program impacy on sales.
Computer sales, service and consulting...single owner, employs 17 people. 2009 taxable income $142000.
I was having no luck in my search so I stopped making phone calls and went off to the kitchen to look for those pastries.
Based on my somewhat limited experience I believe the numbers cited by the IRS, that 98% of small business owners will NOT be impacted by allowing the Bush tax cuts for the top rates to expire.