"Small Biz Federation Has a 'Context' Problem" by Politics Blog | Jackson Free Press | Jackson, MS

Politics Blog

Small Biz Federation Has a 'Context' Problem

Seems like a day doesn't go by without a press release from the National Federation of Independent Businesses (nfib.com) that's got something a little wonky about it. This http://www.nfib.com/press-media/press-media-item?cmsid=60538">latest one, called "NFIB Responds to Obama’s 'you didn’t build that' Statement" takes a line from an Obama speech over the weekend out of context, and then infers that the President is saying people don't build businesses by hard work.

It misses, of course, his larger point. Here's the actual quote:

Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you’ve got a business -- you didn’t build that. Somebody else made that happen.

The NFIB's http://www.nfib.com/press-media/press-media-item?cmsid=60538">response:

“Every small business is not indebted to the government or some other benefactor. If anything, small businesses are historically an economic and job-creating powerhouse in spite of the government.”

Really? So, somehow America is not, in fact, a great place to have a business? Infrastructure and investment -- laws, contracts, currency -- none of these thing helps?

I'm not saying that sometimes government is the most exciting thing for small business to have to deal with, but, some of us do find roads and bridges handy in the course of our business day.

And, yes, the Internet was a government-funded project, and its very openness came because it was a partnership between government and academia.

There are, in fact, some things that government does well -- if private companies had totally controlled the idea of networking computers together we'd probably all still have AOL e-mail addresses... and small business access would be thousands per month. (Don't get me started about our $95 per month fax line from AT&T.)

But, perhaps more important than quibbling over whether or not you built your business completely on your own (we at the JFP certainly know how hard it can be) is doing something about this idea that "government" is something we need to have a "war on" or "drown in a bathtub" or something that we succeed "in spite of."

It's particularly disconcerting coming from a small business organization, because it's a dangerous argument to make.

Government is us. We the people.

In fact, you wonder sometimes why conservatives seem hell-bent on beating the drum of anti-government rhetoric, which does little more than serve to further the oligarchy (government by big business interests) by making "government" seem monolithic and "other."

http://www.esquire.com/blogs/politics/believe-in-america-7685927">Charles P. Pierce in Esquire this month has a great piece about the "common wealth" in this nation:

We owe each other a debt. We owe each other an obligation. That is the thing to which we truly commit ourselves if we follow our Constitution. It is a charter that enumerates individual liberties, but it is not a license for unbridled greed or reckless political solipsism. We owe each other a debt and we owe each other an obligation, and because of these fundamental American imperatives, there are things that we own in common with each other, and that we are obliged to protect for our posterity. The water. The trees. The wild places in the land. We lose sight of these truths sometimes. Acceleration is the great danger. We lost sight of these truths during the Industrial Age, when the accelerated pace of new manufacturing caught the country by surprise. It was only the long, slow rise of progressive politics that brought these basic truths back to the national mind, and we got the national parks out of it. We have lost sight of these truths again, in the Information Age, when even more accelerated technologies caught us by surprise. It is an open question still whether we will be able to recover that which we have forgotten.

It seems to me that business owners and executives in America used to understand this. Maybe I'm naive and the highest ethic has always been selfishness. If so, that's unfortunate.

And speaking of selfishness, it's evident as well in the utterly intractability of certain groups to at least consider putting the top two income tax brackets back at Clinton era rates.

NFIB, last week, was http://www.nfib.com/press-media/press-media-item?cmsid=60513">pushing this chestnut:

The threat of expiring tax relief on top income earners recently sparked debate on the impact it would have on small business. New data released today by Ernst and Young shows tax increases shows that allowing the top two tax rates to increase, as has been proposed by President Obama and many Members of Congress, would greatly impact small businesses. The preliminary results of the study show business owners paying the top two rates account for: 72 percent of all S corporation income; 61 percent of all partnership income; and 13 percent of all sole proprietorship income.

Which may be true, but it's out of context. The fact is, many high-income people organize themselves as corporations or exist in small partnerships; the fact that they've organized themselves in that way does not necessarily mean that "small business" will be strongly effected.

As this fantastic piece on Marketplace called " Would an Income Tax Hike Hurt Hiring" pointed out, of the 25 million business owners who pass their business profits through to their own taxes, only 2.1 million make more than $250k. Many of those opt to pay the alternative minimum tax, which leaves under a million subject to any additional tax on the income that exceeds $250k in a year.

Who are those people? Financial partnerships, doctors, lawyers and consultants make up a lot of them. The rest of them may well have growing businesses -- but remember, they're reporting profits on their income tax returns. Money spent on salaries for hiring new folks because you're growing? That money is an expense against income; it's actually one way to lower you tax bill.

Bottom line: By our calculations, only a small fraction of the business owners who pay taxes as individuals, would see their tax bills go up under Obama’s proposal. And for many of them, the primary reason to hire or not hire probably isn’t their tax bill, but general business conditions. But for the ones that run the most vibrant growing businesses, it could make a difference.

So, NFIB, if only a small number of the highest-performing business owners are going to pay slightly higher rates on income they report above $250k, is this really the right position for the entire National Federation of Independent Businesses to take? At the very least, it seems you should tell the whole story.

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