Obama's Idea of a Small Business

Obama suggested last night in his debate that most small businesses would not be affected by his tax increases for folks making < $200k. He said, and I quote:

Now, Senator McCain talks about small businesses. Only a few percent of small businesses make more than $250,000 a year. So the vast majority of small businesses would get a tax cut under my plan.

What does the SBA say about small businesses?

The US Small Business Administration (SBA) defines a “small business” according to its average annual receipts or the number of its employees. Here are examples from the SBA’s Table of Small Business Size Standards setting forth the maximum average annual receipts by industry that a business can have and still be classified as a small business:

Crop production of all types — $750,000
Animal production except for cattle & chicken/eggs — $750,000
Cattle feedlots — $2.5M
Chicken/egg production — $12.5M
Forestry & logging — $7M
Fishing — $4M
Irrigation, sewage, water supplies — $7M
Housing construction — $33.5M
Heavy and civil engineering construction — $33.5M
Dredging and cleanup — $20M
Concrete, framing, and other housing contractors — $14M
Car dealers — $23-29M
RV, motorcycle, & boat dealers — $7M
Furniture, hardware, clothing & sporting good stores — $7M
Electronic stores — $9M
Supermarkets, gas stations & department stores — $27M
Pharmacies — $7M

There are many more examples at the link. In addition, most of the industries in the Table — such as manufacturers of food, beverages, apparel, print, oil/gas, plastics, plumbing, machinery, computers, electronics, electrical, transportation, and furniture — are considered small businesses based on their total number of employees instead of average annual receipts. In those industries, the cut-off between small and large businesses ranges from 500-1,000 employees per business/industry.

I cannot find any statistics that tell me average reciepts by small businesses. I pored through this huge document and I don't see very much that tells me what kind of revenues small businesses are making. If you can find it, good luck.

What I did find however is that about 39% of small businesses have average payrolls over 196k per year. So if you payroll is greater than 196k you've got to be making more than 250k.

I think Obama is conflating a bunch of terms. The 250k was about personal income before taxes and FICA extending beyond the current income cieling of about 100k. I'm sure this is what he was probably talking about, although it makes no sense to talk about personal income if you are supposed to be talking about small business. Even so, I have issues with that. If he's taking FICA, which is Social Security money and putting it someplace else, I have a big problem with that. My nickel says he's playing that old game of making the budget deficit look smaller than it is by counting FICA as revenue, when it's actually an entitlement which is supposed to go back to the taxpayers in retirement.

So he is either making a big dumb misstatement or being evasive about what percentage of small businesses are going to have to heel to his new tax regime. His characterization is just wrong. And that's a big deal to me.

McCain implied that he was, by and large, going to leave the revenue side alone and give a couple specific cuts. I basically find his approach more fair - the more kids you have the bigger deduction you can take. Whereas Obama says the more money you make the less you get to participate in his tax cuts. I read that as anti-rich, whereas McCain is pro-family. But that's just me.