Republican Mythbusters #5: The Small Business Argument
Every time Democrats propose anything that would be good for working people (more progressive taxation, a higher minimum wage, universal health care, etc.) Republicans claim that the legislation would hurt small businesses. Currently, Senate Republicans are using this line as a justification for their filibuster of a Democratic attempt to extend a payroll tax reduction that would save working families an average of 1000 dollars a year. Democrats plan to pay for this extension with a small tax on millionaires that, according to the Republican rhetoric, would reduce the ability of small businesses to hire more workers. However, as a story that recently aired on NPR reveals, Republicans haven’t been able to identify a single small business owner who would actually be impacted by this legislation.
When asked to justify his opposition to the payroll tax cut extension, Senator John Thune of South Carolina made the classic Republic argument: “It’s just intuitive that, you know, if you’re somebody who’s in business and you get hit with a tax increase, it’s going to be that much harder, I think, to make investments that are going to lead to job creation.”
So, after two weeks of filibustering, NPR decided to take a closer look at this claim. They asked a number of Republican Senators if they could refer them to a small business owner in their district who would be impacted by the legislation and, shockingly, these Senators were unable to provide them with a single individual. They then went to the business groups that have been lobbying against the tax cut extension and, once again, these groups were unable to provide even one concrete example. In desperation they put a call out on facebook. The only responses they received were from small business owners who said that the payroll tax wasn’t a big deal and didn’t even rank within their top twenty concerns when it came to hiring. They didn’t get a single response providing evidence for the Republican position.
As a matter of fact, as Jason Linkins makes clear in a recent article on Huffington Post, the payroll tax extension would actually help small business owners hire more workers. It turns out that if you actually talk to small business owners, which the Republicans don’t seem too intent on doing, they tell you that the uncertainty that prevents them from hiring is not uncertainty about taxes, but uncertainty about demand. Here are a few of the many quotes that Linkins cites in his post:
— Jody Gorran, chairman of Aquatherm Industries: “This mantra that every dollar in tax increases is a dollar away from job creation — give me a break. … It’s not taxes that affects job creation, it’s demand.”
— Lew Prince, owner of Vintage Vinyl: “The economic premise that people won’t hire because they might have to pay more taxes if they make more money is beyond laughable. … You hire when you think there’s a way you can make more money with that hire. The percentage the government takes out of it has almost nothing to do with it.”
— Rick Poore, owner of Designwear Inc.: “If you drive more people to my business, I will hire more people. It’s as simple as that. If you give me a tax break, I’ll just take the wife to the Bahamas.”
The way to increase demand is to put more money in the pockets of people who are actually going to spend it, which is exactly what the payroll tax extension will do. So, when it comes right down to it, the Republicans are not only filibustering a bill that would actually help small businesses, but they’re using these small businesses as cover for their true reasons for opposition: that it taxes the rich people who they almost exclusively represent.
And why should this come as any surprise? If the Republicans were really the party of small business owners would they regularly support farm legislation that makes it impossible for small farmers to compete with the massive agribusinesses that have all but put an end to the family farm? Would they support the roll backs in labor law enforcement that allow massive corporations like Wal-Mart to put local businesses out of business by undercutting them on costs? Finally, would they oppose universal health care coverage that would actually be a huge benefit for small businesses by relieving them of the high costs of providing health insurance for their employees?
Of course not. The reason Republicans always claim that progressive legislation would be bad for small business is because they can’t get away with making their real reasons public: that progressive legislation would be bad for the wealthiest 1% (which, as we’ve pointed out many times here at Pass the Relish, it actually wouldn’t). When they talk about small businesses it makes it look like they care about average Americans and the American dream. Unfortunately, as this debate over the payroll tax extension is making more obvious every day, they don’t.
Editors note: A few hours ago, Republicans in the House approved an extension of the payroll tax cut. However, they intentionally attached it to a bill that would, among other things, approve the building of a massive oil pipeline from Canada all the way down to the Gulf Coast. Both President Obama and Democrats in the Senate have already made it clear that they will not support any bill containing these provisions, which really just makes the argument even more clear. House Republicans, just one year ago, promised not to vote for a single piece of legislation until their number one priority, extending tax cuts on the top 2% of income earners, was approved. Now, they are only willing to support a 1000 dollar tax cut for the average working family if it is attached to a bill that they already know will guarantee its failure. Clearly this as a political maneuver designed to make it look like Democrats are the ones holding up the process. This time, though, I don’t think they’re going to get away with it.