Yes, my friends, my entire small business is the result of Johnny McCain. As are, it turns out, the small businesses of 15.5 MILLION other Americans. We all owe it to Johnny McCain.
Should small business owners fear for their wallets if Obama is elected? Not the vast majority, business and tax experts say. To make its claim, according to a McCain spokesman, the campaign counts as a small-business owner any taxpayer who files a Schedule C, E or F - the forms used to report gains and losses from business ventures and farms.
But there are three main problems with McCain's charge.
What is a small business?
First, it relies on a broad definition of what counts as a small business, including everyone who files a Schedule C, E and F.
But most people who file those forms don't run a business for a living: Those forms are also used to report income from freelance and consulting work, real-estate rentals, and most other non-salary sources.
And, there you go folks. According to Johnny McCain I am a small business owner because I filed a Schedule C for some consulting work. Thank you Johnny for making me a small businessman! I'm a driver of the economy!
For example, McCain and Obama both file Schedule C returns, thanks to their book royalties - but they hardly should be considered small business owners.
In 2005, there were 21.5 million Schedule C returns filed, according to the IRS.
A more realistic definition of small businesses turns up far fewer firms. The Small Business Administration estimates that there were 6 million small businesses in 2005, as measured by those with fewer than 500 employees and with staff on the payroll other than the owner.
So, beyond myself, Senator McCain also made an estimated 15.5 million other Americans into small businesses. I knew he was rich, after all he owns 9 houses and 13 cars, but I didn't know he had the money to make 15.5 million people into small businesses all by himself.
Okay, so obviously Johnny is full of crap, but it gets worse.
Second, even using the broad definition of small business that McCain likes, very few owners would see their own taxes rise.
That's because the lion's share of taxable income comes from a small number of wealthy businesses. Out of 34.7 million filers with business income on Schedules C, E or F, 479,000 filers fall into the top two brackets, according to an analysis of projected 2009 filings by the nonpartisan Tax Policy Center.
The other 34.3 million - or 98.6% - would be unaffected by Obama's proposed rate hike.
And, finally, what about that "Obama 'will increase taxes on 50% of small business revenue' - the line he used in the second presidential debate"
If a business owner falls into the top bracket, that doesn't mean that all of his or her income is taxed at the highest level. For example: If a small-business owner makes $210,000 in taxable income, he edges into the 33% bracket, one of the two top tax rates that Obama would like to raise.
But he would pay the higher tax only on the amount that exceeds the cutoff...this business owner would see his federal taxes increase $1,475 under Obama's plan, which calls for raising the 33% tax rate to 36%.
Another lie, and so CNN Money lays it out.
The bottom line: McCain's claim only works by using an overly broad definition of what counts as a "small business" - and even with that definition, fewer than 2% of business owners would be hit by Obama's proposed rate increase. For those who are affected, the increase would be levied only on a part of their earnings, not all of them.
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