I haven't seen this one posted yet, so I will lay it out below. The question is whether it should be called a "gaffe" or just another Romney lie.
To begin, let's look at the actual transcript, as posted by NPR:
NPR Debate Transcript
What Mitt said about small business taxation:
Mr. President, you're absolutely right, which is that with regards to 97 percent of the businesses are not — not taxed at the 35 percent tax rate, they're taxed at a lower rate. But those businesses that are in the last 3 percent of businesses happen to employ half — half — of all of the people who work in small business. Those are the businesses that employ one quarter of all the workers in America. And your plan is take their tax rate from 35 percent to 40 percent.
What Mitt has done here is to conflate two different pieces of data and parse his words so that they are literally true but provide a false impression.
I will explain below .......
What Mitt Romney said:
Mr. President, you're absolutely right, which is that with regards to 97 percent of the businesses are not — not taxed at the 35 percent tax rate, they're taxed at a lower rate. But those businesses that are in the last 3 percent of businesses happen to employ half — half — of all of the people who work in small business. Those are the businesses that employ one quarter of all the workers in America. And your plan is take their tax rate from 35 percent to 40 percent.
What Mitt is trying to say here is that small businesses file their taxes as individuals (such as Subchapter S corporations), and so ending the Bush tax cuts would impact these "job creators". The 97% of these businesses that are impacted by the Bush tax cuts are impacted because they file as individuals, not corporations. The reason that Mitt was focusing on these particular businesses is because both candidates agree with corporate rates should be lowered, but Mitt was arguing that 97% of small businesses would not be impacted by lowering the corporate rates.
It is true that 3 percent of "small business" indeed employs half of all people who work in small businesses (AFAIK), keeping in mind that the definition of a small business is an employer with less than 500 employees. Examples of such "small businesses" include Orbital Sciences Corporation.
However, here is where Mitt ran off the rails: many of those "small businesses" indeed file taxes as standard corporations, even though they may be indeed small. Just because you are a small business doesn't mean you can't file the standard 1120 tax return, and many do. If you are starting a small business and you need investors, one approach is to incorporate as a standard business so you don't look hinky to investors (although it is becoming common for investors to accept investment in LLCs, which are effectively partnerships).
The 3% of small businesses that hire 50% of employees and the 3% of small businesses that don't file as individuals are not the same companies.
So ... Mitt's "3% of small businesses" would include a large number of small businesses that file as corporations, and therefore would not be impacted by ending the Bush tax cuts. Mitt got it wrong.
Was it a gaffe? Was it a lie? I don't know.