Set aside the half-baked claims, end Bush tax cuts for the richest 2 percent
COLD SPRING, Minn. — As members of Congress went into their August recess, the House and Senate are in the midst of a big standoff about the Bush tax cuts for the richest 2 percent. Front and center in this big debate? Small business.
More specifically, front and center in the debate are assertions about how ending extra tax cuts for the richest 2 percent of income earners (households with take-home taxable income over $250,000) would negatively affect small businesses. These claims are the number one defense of politicians who are fighting to extend the extra tax cuts for the richest 2 percent. There’s just one problem: they’re completely half-baked.
Our family-owned business, Cold Spring Bakery, was started in 1946. As part of the second generation of owners, we have grown to a business with 60 employees, providing baked goods, donuts and wedding cakes for the central Minnesota community. Over the years, we’ve built a respected, trusted business.
I’m a real small business owner. And let me be clear: I fully support ending the extra Bush tax cuts for the richest 2 percent. What about the politicians who say they’re defending small business job creators by voting against ending these extra breaks? They don’t speak for me. They’re just using small business as a pawn to protect special tax cuts for the wealthiest Americans.
The fact is, only about 1 out of 40 actual small business owners will see any change in their taxes if special cuts for annual income over $250,000 end on schedule at the close of this year. That’s because only 2.5 percent of small business owners take home more than a quarter million dollars a year, according to the U.S. Treasury Department.
When lobbyists and politicians claim a higher percentage, you should know that the definition of “small business” they like to use counts hedge fund managers, corporate lawyers and real estate partnerships. It counts celebrities and authors, including President Obama (for his book royalties) and Mitt Romney (for his speaking fees). And it counts at least six of the top 10 lobbying firms in the country. Like I said, half-baked.
Disguising wealthy special interests as “small businesses” for political gain is an insult to real, independent small business owners like me. But that’s not the end of the magic show. “Be patient, real small business owners,” the argument goes, “you may not benefit directly from these tax cuts at the top, but cuts for the rich will ‘trickle down’ to you. Just wait.”
After years of patient waiting, I think it’s pretty safe to say the “trickle down” theory was a complete bust. And the non-partisan Congressional Budget Office has the numbers to prove it: when the CBO studied this very question, it found that extending special tax breaks for the rich was the least effective of nearly a dozen different options for spurring the economy and boosting job creation.
In the end, this whole debate misses a fundamental point about how small business taxes actually work, and what leads small business owners to put out the “hiring” sign. It’s not the income tax rate at all. What prompts us to hire is having more customers walk in the doors of our businesses than we can satisfy with our current staff levels. Customers, not tax cuts, are the real yeast of job creation.
Extending the Bush tax cuts for the richest 2 percent of income earners would cost the country almost $1 trillion over the next 10 years. This is a giveaway to the richest 2 percent that our country, our economy, and our small businesses simply can’t afford.
It’s time to put to rest the half-baked claims about small businesses being impacted by ending the Bush tax cuts for the richest 2 percent. The House and Senate both voted on this before leaving for their August recess. For every member of Congress who voted to protect extra cuts for the richest 2 percent, now is the time for small business owners in their districts to ask them to explain why they’re advancing the interests of Washington lobbyists, Wall Street hedge fund managers, and multi-national corporations – at the expense of real small businesses and our local economies. They’ve got some explaining to do.
Lynn Schurman is the co-owner of Cold Spring Bakery in Cold Spring, Minn. She has been a small business owner for 26 years. Schurmann’s column was distrbuted by American Forum.