President Barack Obama supports ending the Bush-era tax cuts for those earning more than $250,000 annually and small businesses largely agree. July 9 file photo. UPI/Kevin Dietsch. | License Photo
If you strip away the campaign rhetoric, you'll find that small business owners favor allowing the tax rate cuts for the wealthiest taxpayers to expire to help pay down the U.S. debt, Small Business Majority says.
A poll the advocacy organization released last week indicated the majority of small-business owners thinks raising taxes on the top 2 percent of taxpayers is the right thing to do and government can play a role in helping small businesses thrive.
The poll and another survey earlier this year, Small Business Majority Founder and Chief Executive Officer John Arensmeyer says "really show that despite the hypersensitive and partisan election environment and the rhetoric bandied about, small business wants government to play a role to create a level playing field."
And one way, he said is to allow tax rates for the wealthiest taxpayers enacted during George W. Bush's administration to expire to help address the economic crisis, citing the survey's results indicating 52 percent favored such a path. Thirty-nine percent said raising the tax rate for the wealthy would mean raising taxes on job creators and small business, he said.
Small business owners aren't "monolithically ideological" on these issues, seeing a role for government when it's helpful but equally recognize when government intervention isn't warranted.
"Small-business owners are pragmatic" about when government steps in, he said, not part of an "ideological broad-brush."
"That's not the way they view the world," Arensmeyer said.
A key argument for keeping the series of tax rate cuts is the claim most small businesses file as individuals and would be impacted by increases to the individual rate -- a claim the organization says its polling shows is misguided.
While most respondents -- 54 percent -- report their business income is passed through to their personal taxes, only 5 percent reported having total income of more than $250,000, Small Business Majority said. Based on this finding, the survey said a huge percentage of small-business owners would not be impacted by the expiration of tax cuts on income of more than $250,000 for families.
Ann Zimmerman of Cincinnati, who owns an accounting firm and an Internet solutions company, said she would be one of the upper 2 percent who would see their rates return to those in effect when Bill Clinton occupied the White House.
The argument against letting high-end tax rates expire is "purely political," Zimmerman said. "I happen to be in the top tax bracket and I'm in favor of letting them expire."
The majority of businesses would be unaffected by the expiration, she said.
"These are the job creators that can drive the economic recovery," she added.
Furthermore, Zimmerman said, "there's no way" she would let her personal tax rate "drive my business decisions."
The middle class must get back on track if the economy is going to get back on track, she said, adding she favored keeping the lower tax rates for the middle class.
Agreeing with her was small business owner Luke Chung, owner of a software company in Vienna, Va., who argued hiring and investment are based on "profit potential, not tax consideration."
Decisions driven by tax policy are "kind of short-sighted," he said.
Chung said he thinks the differences between the Bush tax rates and the Clinton tax rates "doesn't matter much" and doesn't "impact my decision-making."
Chung, like Zimmerman, expressed concern about the country's economic health and the need to drive down the deficit. But Chung called the top-tier tax rate issue "just a tiny piece" of the overall picture.
The National Federation of Independent Businesses, another advocate for small business, said its membership indicated federal and state taxes on business, property taxes and the complexity of the tax laws were among their major concerns.
"This demonstrates a strong need for tax reform that helps small business owners," the organization said on its website.
The organization said tax reform must include reform for individual and corporate tax codes, tax rates on corporate and pass-through businesses (business owners who file through their personal taxes), which should stay equal and low. Additionally, reform should promote economic growth and simplify the tax code
"The tax implications of choosing a pass-through entity should play a major role in the tax reform debate," NFIB said. "While most discussions on tax reform are about lowering the corporate tax rate, tax reform should also include lowering the individual tax rate to support pass-through businesses."
NFIB has written to Congress on behalf of several pieces of tax-related legislation, noting small businesses, 75 percent of which are organized as pass-through entities, are "disproportionately impacted by any increase in marginal tax rates."
In a letter written during the summer to Congress, NFIB said increasing the top tax rates would shrink the economy by 1.3 percent and cost 710,000 jobs.
In the Small Business Majority survey, a majority of small business owners said the most important task for Congress and the president next year is to develop a plan to create more jobs.
Nine in 10 small business owners surveyed said they favor eliminating tax breaks given for moving production oversees and support providing new incentives for bringing production back to the United States.
Seventy-two percent of small business owners said they support eliminating loopholes that favor large corporations. A majority said it would like to see tax breaks for gas and oil companies removed and expressed support for tax incentives that encourage clean-energy investment.
Finally, 48 percent of business owners said they were doing OK, 27 said they were doing well or very well and 24 percent said their business is not doing well.
Small Business Majority said more of the small-business owners identified themselves as Republicans than Democrats, 47 percent to 35 percent.
The telephone poll of 500 small-business owners was conducted Sept. 27-Oct.12. The margin of error is 4.4 percentage points.