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October 5, 2011

The talking points about “Small Businesses” may not be supported by the facts.

The term small business is used frequently.  Unfortunately there are many definitions of “Small Business”.   Without knowing the definition being used it is difficult to determine the impact of policies on small businesses or the impact on the overall economy. 
It seems clear that very few small businesses fall into the top two tax brackets.  Doctors, lawyers, members of limited liability companies, shareholders of “S” corporations are generally included in the definition of small businesses.  Many people would not consider these to be the small businesses.  Many think small businesses are “mom-and-pop store owners.  
According to a Treasury Report cited by CNNMoney in an Oct. 3, 2011 article, only 20% of small businesses in 2007 had employees.  A substantial number of small businesses are one person operations.  The CNNMoney article indicates that small businesses do create a lot of jobs.  Unfortunately, a substantial number of new ventures do not survive.  The net jobs created by small businesses is therefore not as significant as indicated by the talking points we hear in the media. 
The article also raises the questions of how we can offset the $1trillion of revenue reduction from the tax cuts on the top earners.  
The size of the business does not appear to determine the best policies to be adopted. 

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