Analysts are looking askance at a claim that raising taxes on the rich would spell doom for America's small business owners.
According to a policy brief from the Center on Budget and Policy Priorities, a left-leaning think tank, if Congress were to let the Bush-era tax cuts expire for the wealthiest Americans, it would probably leave most small businesses unharmed. (Hat tip to The Washington Post.)
That's a conclusion that runs counter to what many conservative politicians have said, among them Mitt Romney, the GOP nominee for president. Last summer, when Berkshire Hathaway CEO Warren Buffett first made his call to tax American millionaires at a higher rate than current U.S. tax policy dictates, Romney argued that such a tax hike would put an additional burden on small businesses, since some of them file taxes as individuals.
However, the CFPB analysts, citing Treasury Department data, said that a tax increase on the rich would only affect about 2.5 percent of all small business owners. (A separate estimate from the Joint Center on Taxation said that the number of affected small businesses would be closer to 3.5 percent.)Moreover, the historical record suggests that higher tax rates might actually be good for small business payrolls. The authors offer data showing that the pace of small business job growth was twice as fast under President Bill Clinton, who raised taxes, as it was under President George W. Bush, who cut them during his first year in office.