Undoing Tax Cuts Will Have Little Impact On Small Businesses - WSJ's

[question everything]

April 1, 2004

CAPITAL
By DAVID WESSEL

(snip)

But raising tax rates on upper-income Americans isn't about small businesses. Few of them make enough money to be affected by Sen. Kerry's proposal to undo the Bush tax cuts on those with incomes above $200,000. You'd never know that from listening to Republican rhetoric. The Republican National Committee declares: "Kerry's Economic Plan Would Raise Taxes on Small Businesses."

(snip)

So a few facts:

A lot of upper-income taxpayers do report some income from what might be considered a small business. ... The Tax Policy Center ...says about 60% of taxpayers in the over-$300,000 bracket show some small-business income; so do 45% of the over-$175,000 bracket. But most live off their paychecks, not business profits. Of all tax returns that list any small-business income, 60% report that income accounts for less than half of the taxpayer's total income.

And most small businesses don't make nearly enough money to be touched by Mr. Kerry's tax plan. The latest Internal Revenue Service data available, from 2001 tax returns, show that less than 4% of taxpayers reporting any small-business income had total income above $200,000. The Tax Policy Center estimates that last year 6.5% of taxpayers with small-business income on their tax returns had total income above $200,000.

Who are these "small-business owners"? Some of them are the heroic job-creating corner stores or start-ups that Mr. Bush's speeches describe. But the pay of anyone whose business is organized as a partnership -- doctors, lawyers, management consultants -- shows up on a tax return as small-business income. The successful ones end up in the top tax bracket where Mr. Kerry's tax plan would bite. Checks that members of corporate boards of directors receive, royalties that authors get, and consulting fees that professors charge show up as small-business income, too, and those folks are hardly the job creators of the modern economy.

(snip)

The small-business owner is to modern Republicans what the yeoman farmer was to Thomas Jefferson, the hero of the economy. But most Americans today work for big firms that are taxed as corporations, not as small businesses on individual tax returns. More than 70% of Americans work for firms with more than 50 employees, and half work for firms with more than 500 employees. And those are facts.

Write to David Wessel at [email protected]

URL for this article:
http://online.wsj.com/article/0,,SB108077042508870641,00.html

[Old and In the Way]

1. Anyone see the Emporer's clothes?

[question everything]

2. I really hope that Kerry will talk about the deficit

especially now, with Bush crowing about all the jobs that were added.

I am reminded of that TV ad of someone who says that he got this and that how? By being in debt up to his ears.