10/04/2012 03:59 pm ET Updated Oct 05, 2012

Presidential Debate: 5 Small Business Facts Romney And Obama Conveniently Omitted

Mitt Romney and Barack Obama said the phrase “small business” a combined 29 times during Wednesday night’s debate, repeatedly sparring over who loves the little guy more.

They pulled entrepreneurs into disputes over taxes, health care, outsourcing and even Donald Trump. Yet there are certain small business facts that both candidates conveniently left out.

Here are five things Romney and Obama won't say about small business:

1. Small Businesses Don't Create The Majority Of Jobs

"It's small business that create the jobs in America," Romney said last night. But the truth is that, since 1990, large 500+ employee firms have done a better job generating employment than small firms with less than 50 workers, according to an analysis of government data by Jared Bernstein, senior fellow at the Center on Budget and Policy Priorities and a HuffPost blogger.

As Bernstein noted in a recent blog post, studies showing small businesses create most of the nation's jobs use data that define small businesses as establishments of up to 500 employees including small units of big businesses such as CVS or Apple store locations.

On their own, small firms with 1-49 workers "are not disproportionate job creators," according to Bernstein.

2. Raising Taxes On The Rich Does Not Affect Small Businesses

Romney and Obama agreed on at least one thing last night: Raising taxes on the rich would affect only the top three percent of small business owners--those making more than $250,000 a year.

But the two candidates argued over whether the top three percent of business owners were actually job creators. Obama said the vast majority of them were wealthy people like Donald Trump, whose partnerships or S corporations get classified by the IRS as small businesses. Such investment vehicles are not businesses that hire workers and add to employment, Obama argued.

Romney, on the other hand, said those three percent of small business owners "employ one-quarter of all the workers in America."

But Romney is confused on this one. His stats come from a report by the National Federation of Independent Businesses, a controversial conservative group that pulled its numbers from a 2011 report examining all businesses in the U.S. that don't pay corporate income tax. Combined, all of those companies employ one-quarter of American workers, but the top three percent employ a much smaller share.

John Arensmeyer, head of the Small Business Majority, a non-profit advocacy group, said that while there's little data available on the top three percent of business income earners, government data reveal that less than 17 percent of their total income comes from a business.

3. Obama Didn't Really Cut Taxes For Small Businesses 18 Times

Last night Obama touted his 18 small business tax cuts. But some of those "tax cuts" weren't really tax cuts at all. Rather, they were incentives, the New York Times recently reported. In other words, business owners had to spend money -- on health insurance, a new employee or new equipment -- in order to see any savings. On top of that, the NYT noted, most of the incentives have already expired.

4. Most Small Businesses Have One-Man Payrolls

More than 77 percent of small businesses consist of just one person, according to U.S. Census Bureau data. An additional 18 percent are micro-businesses, with fewer than 10 employees, the data show. Both figures suggest that the vast majority of small businesses, which both candidates have referred to as the engine of job growth in America, are, in fact, tiny enterprises with tiny payrolls.

5. The Small Business Job Creation Problem Goes Back Decades

Romney took a shot at Obama last night when he said that "over the last four years, small-business people have decided that America may not be the place to open a new business." But the small business job creation problem goes back further than Obama.

The rate of job growth in new U.S. companies (less than one-year-old) fell under both Bill Clinton and George W. Bush. That's according to a report released in September by the Hudson Institute, a Washington, D.C. think-tank. The study showed a drop-off in startup jobs that started during George W. Bush's second term in 2006 and has accelerated under Obama.

Part of the problem is that, for decades, new firms in the U.S. have been opening their doors with fewer workers, according to the economist Robert Litan, who referred to the startling trend as "America's slow leak in job creation." New firms, he found, have contributed fewer and fewer new jobs to the economy since at least the middle of the last decade and perhaps earlier.

Janean Chun contributed to this report.



Presidential Small Business Fails