Skip to main content

Is a business that brings in $100 billion and employs 50,000+ people around the world a small business? Mitt Romney & Paul Ryan think so. That's because, according to Romney & Ryan, any business - no matter its size or its revenue - is a small business so long as the business' income is "passed through" to its owners and therefore taxed as income on the business owner's personal income tax statement. These business do not pay corporate taxes, and therefore - according to Romney & Ryan - they are small.

The real kicker is that many of these small business have "Inc." at the end of their names, which tends to lead to the erroneous conclusion that the business pays corporate taxes and is therefore not small according to Romney & Ryan. Turns out, you can be a large corporation and a small business at the same time. Take for instance, the small business mentioned earlier - the one with $100 billion in revenue and 50,000+ employees. It has a name: Koch Industries, Inc. It's the second largest privately held business in the United States.

Koch Industries, Inc., is an S-Corporation. It's one of the two types of corporations that we have in the United States: S & C. C-Corporations, like Apple & Facebook, are subject to double taxation - meaning, these businesses pay state and federal corporate tax, and then their shareholders pay taxes if, and when, dividends are issued. One of our commenters, VClib, correctly noted, "Many corporations ... have never paid dividends and so their shareholders have not been subject to double taxation. Shareholders of C corporations don't pay an income tax unless there is a dividend declared or they sell their appreciated stock, at which time they would owe a capital gains tax." C-corporations are not small businesses according to Romney & Ryan.  

But an S-Corporation, on the other hand, is a corporation that elects to be treated as a pass-through entity (like a sole proprietorship or partnership) for tax purposes. Since all corporate income is "passed through" directly to the shareholders who include the income on their individual tax returns, S-Corporations are not subject to double taxation. Therefore, S-Corporaitons are small businesses according to Romney & Ryan.

So, when you hear Romney & Ryan talk about championing small businesses, remember that they're not just talking about your local florist, doctor's office, or taco stand. They're talking about championing their friends' small businesses, like Charles and David Koch.

EMAIL TO A FRIEND X
Your Email has been sent.
You must add at least one tag to this diary before publishing it.

Add keywords that describe this diary. Separate multiple keywords with commas.
Tagging tips - Search For Tags - Browse For Tags

?

More Tagging tips:

A tag is a way to search for this diary. If someone is searching for "Barack Obama," is this a diary they'd be trying to find?

Use a person's full name, without any title. Senator Obama may become President Obama, and Michelle Obama might run for office.

If your diary covers an election or elected official, use election tags, which are generally the state abbreviation followed by the office. CA-01 is the first district House seat. CA-Sen covers both senate races. NY-GOV covers the New York governor's race.

Tags do not compound: that is, "education reform" is a completely different tag from "education". A tag like "reform" alone is probably not meaningful.

Consider if one or more of these tags fits your diary: Civil Rights, Community, Congress, Culture, Economy, Education, Elections, Energy, Environment, Health Care, International, Labor, Law, Media, Meta, National Security, Science, Transportation, or White House. If your diary is specific to a state, consider adding the state (California, Texas, etc). Keep in mind, though, that there are many wonderful and important diaries that don't fit in any of these tags. Don't worry if yours doesn't.

You can add a private note to this diary when hotlisting it:
Are you sure you want to remove this diary from your hotlist?
Are you sure you want to remove your recommendation? You can only recommend a diary once, so you will not be able to re-recommend it afterwards.
Rescue this diary, and add a note:
Are you sure you want to remove this diary from Rescue?
Choose where to republish this diary. The diary will be added to the queue for that group. Publish it from the queue to make it appear.

You must be a member of a group to use this feature.

Add a quick update to your diary without changing the diary itself:
Are you sure you want to remove this diary?
(The diary will be removed from the site and returned to your drafts for further editing.)
(The diary will be removed.)
Are you sure you want to save these changes to the published diary?

Comment Preferences

  •  HawksL - one nit (0+ / 0-)

    As it relates to C corporations the double taxation is the C level corporate federal income tax and the second is the tax on dividends to the individual shareholders, but only if dividends are paid. Many corporations, including Apple, have never paid dividends and so their shareholders have not been subject to double taxation. Shareholders of C corporations don't pay an income tax unless there is a dividend declared or they sell their appreciated stock, at which time they would owe a capital gains tax. A few edits in your dairy would make it accurate. Capital gains taxes are never due until you sell the appreciated capital asset, like stock in a corporation.

    In an S corporation the net income flows through to each shareholder and is taxed, regardless of whether the shareholder received any of that income as a cash payment, but it is only taxed once.

    "let's talk about that"

    by VClib on Tue Oct 16, 2012 at 05:34:10 PM PDT

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site