Wednesday, September 29, 2010

Lying almost without lying

The Republicans in Congress are united in trying to get the Bush tax cuts made permanent instead of being allowed to lapse.

A key argument they make is that many small business owners have incomes over $250,000 a year, and so taxing them more is a "job killer." Note the "job killer" is the GOP's favorite catchphrase this year, for obvious reasons.

But only 3% of small business owners have incomes that high. And as labor pundit Robert Reich observes, most of those "small businesses" are actually individuals with few or no employees, who've incorporated themselves as "small businesses" for tax purposes. Think doctors, lawyers, investment bankers.

And because they hire few or no people regardless of whether their income goes up or down, taxing them has zero impact on the number of jobs out there.

Moreover, letting the Bush tax cuts lapse returns us to the tax structure of the Clinton years--in which far more jobs were created than in the Bush tax cut years.

But apart from the particulars of this argument, see how they lie? They classify as "small businesses" entities that aren't what most people think of when you use that term. BTW they also include as "small businesses" hedge funds with billionaire managers and Price Waterhouse to boot. But if you torture the term "small business" they aren't exactly lying.

But then they build an authentic lie on top of that deception: that restoring Clinton era taxes would be a "job killer." I can only assume they're hoping to trigger such fear and anger in voters that they lose their powers of reason. That's certainly worked before often enough.

And in fact the real "job killer" is supply-side voodoo economics. Giving rich people more has created lots of jobs--in China, India, Malaysia and elsewhere as they've offshored manufacturing. And rich people's own job-creating consumerism is microscopic compared to that of a bunch of middle class people if they, in aggregate, had the same income as that rich person.

Consumer spending overall is down today because ALL of the increase in worker productivity since around 1980 has been appropriated by America's billionaire class once you adjust for inflation. So people are working harder for the same or less than before.

As was also true in 1929--the last time the disparity in wages was this great. That disparity went down and stayed down until the late 1970s, but has been increasing ever since--and still is.


dwm said...

"3% of small business owners have incomes that high"

how do you know this? or another way, how do i know this is true? since this tax argument started i have been trying to define 'small business' so i can have my own opinion, but the answer seems to depend on who you ask. so ... who really has the answer?

Ehkzu said...

If you look up "small business" in Wikipedia ( you'll see it varies from country to country, and thus is pretty arbitrary.

The problem, as I was saying, is that the definition you choose should be function. If you just go by # of employees you include people who are essentially freelance, high income professionals, who are only classified as "small businesses" for tax purposes.

And if you don't include some kind of total income cut-off your definition's going to include all those hedge funds whose bosses may have incomes exceeding $1B.

The main trick is to demand that politicians talking sanctimoniously about "small business" define what THEY mean. If they're Republicans, you'll almost always find they've snuck in one of these bogus loopholes.

Remember, if Bill Gates walks into a bar, the average income of someone in the bar goes through the roof, even if every single other denizen of the bar is unemployed, living on food stamps.

That's the kind of trickery being used here.

Personally I find the U.S. Small Business Administration definition of "small business" including companies with up to 499 employees is really stretching it.

Any valid definition will include a head count limit, an annual sales limit, a net assets limit--and I'd add a CEO income limit.

The SBA has a $7M total business income limit for nonmanufacturing small businesses. That's good, but the Rebublicans are sneaking in all those doctors and investment bankers and whatnot that pretend to be "small businesses." Watch for that.