Hunting the elusive small-business owner

(image borrowed from PrairieAire)

From NPR:

For the second week in a row, the Senate on Thursday voted down proposals to extend the payroll tax holiday through next year. In the case of the Democrats' proposal, Republicans objected to the "millionaires surtax" that would be used to pay for it.

Ever since the idea of the surtax was introduced weeks ago, Republicans in Congress have railed against it, arguing that it is a direct hit on small-business owners and other job creators.

Republicans claim that this is a tax on "job creators," which will hurt job growth in America. OK, so what does a responsible journalist do in a case like this? You'd probably want to talk to those "job creators" yourself, right?

Only they seem remarkably hard to find:

We wanted to talk to business owners who would be affected. So, NPR requested help from numerous Republican congressional offices, including House and Senate leadership. They were unable to produce a single millionaire job creator for us to interview.

So we went to the business groups that have been lobbying against the surtax. Again, three days after putting in a request, none of them was able to find someone for us to talk to.

According to the article, NPR finally went to Facebook, where they got replies from "several business owners" who'd be affected by the millionaires surtax. The only problem is, these business owners disagreed with Republican leaders, saying that it would not affect their job hiring decisions:

"It's not in the top 20 things that we think about when we're making a business hire," said Ian Yankwitt, who owns Tortoise Investment Management. ...

Yankwitt says he's had many conversations about hiring, "both with respect to specific people, with respect to whether we should hire one junior person or two, whether we should hire a senior person."

He says his ultimate marginal tax rate "didn't even make it on the agenda."

Yankwitt says deciding to bring on another employee is all about return on investment. Will adding another person to the payroll make his company more successful?

For Jason Burger, the motivation is similar.

"If my taxes go up, I have slightly less disposable income, yes," said Burger, co-owner of CSS International Holdings, a global infrastructure contractor. "But that has nothing to do with what my business does. What my business does is based on the contracts that it wins and the demand for its services."

Burger says his Michigan-based company is hiring like crazy, and he'd be perfectly willing to pay the surtax.

"It's only fair that I put back into the system that is the entire reason for my success," said Burger.

You can probably guess what Republican leaders said about that:

All of this contradicts the arguments about job creators being made by Republicans in Congress.

"Those I would say were exceptions to the rule," responds [John] Thune. "I think most small-business owners who are out there right now would argue that raising their taxes has the opposite effect that we would want to have in a down economy."

But those small-business owners apparently don't want to talk.

The thing is, Republicans are faith-based, not evidence-based. You're supposed to believe their claims for the same reason they do, because they want to believe them.

No, they can't produce any small-business owners to back up their claims. Indeed, the only small-business owners NPR could find said just the opposite. But Republicans believe what they believe. They just have faith that they're right.

And since they know they must be right, regardless of the evidence, then it's only logical that those small-business owners NPR found must be the exceptions to the rule, right? There's a great "silent majority" of small-business owners out there,... somewhere. They're just like Bigfoot, very, very elusive.

And how many people are we talking about, anyway? Here's Greg Sargent at The Washington Post:

Senate Dems are set to hold a vote on extending the payroll tax cut, which independent experts say is necessary to prevent the recovery from stalling. Republicans oppose extending it, partly on the grounds that it would be paid for by a 3.25 percent surtax on income over $1 million. [my emphasis]

The dispute is over how to fund the extension. As a spokesman for John Boehner put it, extending the tax cut is a “potential area for common ground,” but it’s a nonstarter if it’s coupled “with a job-killing tax hike on small businesses.”

So it’s time to check in again with the non-partisan Citizens for Tax Justice to determine exactly what this surtax would mean — how many people it would impact, and how much in additional taxes they would have to pay.

Here’s the answer, provided to me by the group: The surtax would impact around 345,000 taxpayers, roughly 0.2 percent of taxpayers, or one in 500 of them. Those people would pay on average an additional 2.1 percent of their overall income, or just over 1/50th of that overall income, in taxes.

In a majority of states, only one-tenth of one percent, or one in 1,000 taxpayers, would pay this surtax.

And how many people would benefit from the payroll tax cut? According to the group, around 113 million tax filing units — either single workers or families that include more than one worker — would see their payroll tax cut extended. That’s a lot of people — well over 113 million workers, in fact.

This isn't the 1% against the 99%.  It's the .1% against the 99.9%.  And even if these are the "job creators," Republicans have shown no evidence whatsoever that this would affect hiring in the slightest.

Besides, one way or another, someone is going to pay more in taxes. The only question is who:

Even putting aside the argument over whether extending the cut would have stimulative value — which some Republicans doubt — you’re still left with a clear cut case in which either one group (1/500th of taxpayers, all of whom are wealthy) or the other (more than 113 million workers) ends up paying more than they do now.

Gee, I wonder how quickly the Democrats will cave this time? (OK, call me cynical.)

Incidentally, fact checking at The Washington Post also looks at whether or not these millionaires really are small-business owners.

If you define a small-business owner as someone who gets at least one-quarter of his income from the business - because otherwise, he's just dabbling (and that's certainly not the mom-and-pop shops we think of as small businesses) - then only 13% of the people affected by this proposal - people making more than $1 million per year - are actually small-business owners, anyway!

So, not only have Republicans no evidence that this would harm hiring at small businesses, the vast majority of the wealthy affected by this millionaire surtax aren't small-business owners in the first place!

Incredible, isn't it? But this argument is coming from a political party which convinced ordinary people that estate taxes on the super-rich were "death taxes" that would affect everyone. With Fox News propaganda, apparently, all things are possible.

And the Democrats aren't known for having a spine. You'd think this would be a slam-dunk, but they had a slam-dunk a year ago, when it came to extending the Bush tax cuts on the wealthiest of Americans, and they blew that. They were too timid even for that fight, so it's hard to have much confidence in them now.

But even Democrats can't be this politically inept, can they?