These are not new facts; they are just run so counter to the Republicans’ tax disinformation campaign that they seem new and startling to those who haven’t heard them before. They have sprung, seemingly fully grown from the ground, thanks to a handful of court filings and one lightning strike of reality that cut through the usual cold fog spread by John of Orange himself, the Minority Leader in the House. Mr. Boehner’s appearance on Face The Nation on CBS revealed far too much of the iceberg than his colleagues or his puppeteers would like. As you’ll see, it is almost amazing that they’ve let Boehner keep his job after this remarkable exchange about the expiration of the Bush Tax Cuts for the rich, with Bob Schieffer:
Schieffer: Only three percent of those ‘Small Business’ people you keep talking about – all the ‘Small Business’ people, they’re going to be taxed – only three percent would be affected by that. Do you quarrel with that figure? Is that a right figure or a wrong figure?
Boehner: Well, it may be three percent, but it’s half of ‘Small Business’ income. Because, obviously, the top three percent have half of the gross income for those companies that we would term ‘Small Businesses.’
Half of the gross income by all the Mom-And-Pop, Part-Time, Make-Money-At-Home, Pull-Yourself-Up-By-Your-Own-Bootstraps enterprises is generated by just three percent of what Boehner and his pack of corporate operatives would “term ‘Small Businesses’?”
Good lord! How exactly, then, do they decide which businesses are termed “Small Businesses?”
Some calculation done with little dribs and drabs of information – much of it accumulated by the Pulitzer-Prize winning tax reporter David Cay Johnston – tells the amazing story. The tax prep giant H & R Block confirmed to Politico that it has 1,500,000 “Small Business” clients, but that an extension of the Bush Tax Cuts for the rich would benefit less than one half of one percent of those clients. Meantime, the Congressional Joint Committee on Taxation states that one quarter of one percent of the country (less than 750,000 people) would be affected by changes in the top tax rate.
The outskirts of the truth are within sight. The only thing “Small” about these businesses is how many of them there are.
One man who could tell us pretty accurately is Congressman Dave Camp of Michigan, the ranking Republican on Ways And Means. According to a footnote – literally, a footnote – in Committee paperwork:
"According to the Joint Committee on Taxation, 94-percent of all U-S businesses in 2007 were S corporations, partnerships or sole proprietorships -- "pass-through" business types commonly used by small businesses."
‘Pass-through’ is accountant-speak for a company that itself files no taxes, because it ‘passes through’ any profits to its owner or owners. The owner or owners report them instead on their personal tax returns.
What this all adds up to is an amazing sleight-of-hand, against which every Democrat, and any honest Republican or Tea Partier in this country, should be campaigning against without cease or respite for the next 40 days: “Small Businesses” are called “Small Businesses” not because they have a small payroll or a small profit or small political influence.
They are called “Small Businesses” only because each business has a small number of owners. And in the cases of S Corporations, small is anything up to 100 owners!
Some of the economic data recently cited by The Washington Post would make your toupee spin. More than half a million Americans who reported at least $200,000 in income in 2008, did so as partnerships or S Corps. And the more money you make, the more you are likely to take advantage of the procedure. Of those making $10,000,000 or more a year, 89 percent filed as partnerships or S Corps. Thus in 2008 more than 500,000 of the so-called “Small Businesses” report assets in excess of more than a million dollars. Three years earlier, nearly 20,000 “Small Businesses” had annual receipts of more than $50,000,000.
Because individual tax filings are not on the public record, there is no registry of these not-so-small “Small Businesses.” But enough information leaks out – through court filings, through self-identification, through an occasional spotlight, that we begin to understand the GOP’s dedication to them:
Note here that the politicians mix in to the definition any company that uses the aforementioned “pass-through” accounting trick. Last week, as Democrats in the House creaked slowly up to speed on revealing this remarkable switcheroo, they identified three limited partnerships that file as pass-throughs. They are:
-- Enterprise. They make pipelines. Small ones I guess.
-- Kohlberg, Kravis, and Roberts. No, they’re not a drug store in Dryden, New York. They’d be on Wall Street.
-- PriceWaterhouseCoopers. Just one of the world’s largest accounting firms.
Would that these were the most egregious examples of the amazingly dishonestly named “Small Businesses.” In fact, the infamous Koch Brothers are even involved in a “Small Business” empire. From their own website comes a list of partnerships – each, a “Small Business” – that in total employ more than 70,000.
There are – naturally – trade association for S Corporations. “The S Corp Association” lobbying group is chaired by an executive of The Hillman Company, another “Small Business” that happened to have been founded by a billionaire whose family heavily finances the GOP in Pennsylvania. “The S Corp Group” president is from Venn Strategies, another “Small Business” which draws its president from the roster of former staffers to Senate Majority Leader Reid, and its C-O-O from the ranks of special assistants to former President Bush. The Group’s directors include representatives from: Ferrell Gas, a “Small Business” that provides propane and propane accessories to only a million customers; The Dead River Company, another “Small Business” with only half a billion in annual revenue, commercial real estate worth another $300,000,000, and only 1200 employees; Coors Tek, the leading manufacturer of technical ceramics on this continent (and founded by that Adolph Coors); and of course, that tiny little bathtub and kitchen sink operation, the McIlhenny company. They scrape by somehow even though they sell their Tabasco brand sauce in only 160 countries.
Other mega-companies have converted to S Corporation status, and as a result, “Small Business” status. Tribune – as in the little newspaper in Chicago and its affiliated news operations – did so in 2008, making itself an extra One Billion, 900 million bucks. The year before, The Boston Globe reported that Fidelity Investments had become an S-Corp and saved itself hundreds of millions in the process. Even the company that built The Hoover Dam, and is today still putting up nuclear power plants, oil refineries, railroads, seaports, and airports around the world, has become a “Small Business.” It’s Bechtel, for goodness sakes, and though its revenue is 31 Billion a year, and it has 49,000 employees, and it is the single largest engineering and construction firm in the world. And it’s a damned “Small Business.”
The S Corp is of course a favorite tax break for high-priced actors, authors, and celebrities. Bloomberg News reports President Obama is an S Corporation. As was the late J. Howard Marshall (Mr. Anna Nicole Smith). As is Cindy McCain, with her beer distributorship and her six million bucks in reported income. As is – well – me.
And the whole thing gets tied into a neat circle of the snake eating its own tail, of the Republicans defending “Small Businesses” so rich they can by themselves bankroll every Republican campaign in the land. When the news came out that the Koch Brothers were as prominent in the “Small Business” game as anybody else in the nation, the Obama Administration was accused by the conservative Weekly Standard of deliberately compromising the Kochs’ tax returns. In truth, the Koch S Corp status had been revealed in court filings and was already in the public record. But a perfectly symmetrical picture of misrepresentation and deceit needs one figure to fully round it out, and that is the aforementioned guy who happens to pay Kobe Bryant’s salary.
His name is Philip Anschutz, and he owns at least a part of more than 100 “Small Businesses.” He owns “Small Railroads” and “Small Oil Companies” and “Small National Movie Theater Chains” and “Small Sports Arenas” and “Small Soccer Leagues” (well, he only has 50 percent of Major League Soccer, that’s relatively small). And just for good measure, he owns “Small Newspapers.” And one of them is the paper that falsely accused the Administration of leaking the reality of the Koch Brothers’ “Small Businesses” – The Weekly Standard.