As it did during last week's presidential debate, "small business" came up frequently during last night's vice presidential debate. Together, Vice President Joe Biden and Representative Paul Ryan invoked the term 17 times in response to questions from Martha Raddatz. But, as with the presidential debate, the candidates delivered no direct statements about what they would do for small business owners.
Biden and Ryan did not address any of the topics small business organizations told Yahoo! Small Business Advisor they would like to hear discussed during the debates: they offered no plans for improving small business access to credit, not a word about crowdfunding or innovative approaches to supporting startups, and no mention of entrepreneurship nor steps the country could take to encourage self-employment and nurture small business.
In fact, small business was mentioned during the vice presidential debate almost exclusively in the context of tax reform. Specifically, the candidates and their parties disagree about the consequences for small business owners if Congress fails to extend Bush era tax credits to individuals who earn more than $200,000 annually. Biden and Ryan's references to small business during the debate related mostly to how extending or failing to extend existing tax policies will impact small business owners.
The fact checkers went to work immediately after the debate to file reports today on the veracity of Ryan and Biden's arguments about this impact.
Ryan claimed that two-thirds of jobs in the US come from small businesses and that failing to extend the breaks would "tax about 53 percent of small business income." Biden responded that 97 percent of small business owners make less than $250,000. The implication was that only three percent of small business owners would be impacted by the tax increase.
Both are correct, but incomplete, when sizing up the effect on small business of raising taxes for individuals making more than $200,000 and married couples making more than $250,000, as Obama wants to do. Republicans say that would hit small-business owners who report business income on their individual income tax; Democrats say the overwhelming majority of small businesses would not be affected.
According to a 2010 report by the Joint Committee on Taxation, the official scorekeeper for Congress, about 3 percent of people who report business income would face a tax increase under Obama's plan. That support's Biden's point.
The same report says those business owners account for about half of all business income. That supports Ryan.
Fact-checking the same exchange, Glenn Kessler, author of The Fact Checker column at the Washington Post concludes that "Biden is correct that the tax hike proposed by President Obama would hit only 3 percent of business owners." But Kessler explains:
This is two sides of the same coin. Higher taxes on individuals would hit 53 percent of business income. But they aren't necessarily "small" businesses. … When Republicans often speak of "small businesses," they are referring to the companies that file under the individual tax code. But not all of them are what most Americans would consider small businesses — and not all of them are that small, either.
Some of these "pass-through" companies are rather large, with revenues of more than $50 million, but they represent just a small proportion of such companies.
Ultimately, Kessler writes, under Obama's plan, 97 percent of small businesses would get to keep their Bush-era tax cuts.
In a statement released after the debate, Small Business Majority founder and CEO John Arensmeyer said it was:
encouraging to hear key small business issues being clarified during this debate, such as whether allowing tax cuts for high-income earners to expire would impact small businesses. It was explained that the majority of real, mom and pop businesses in America would in fact not be impacted if the 'Bush tax cuts' are allowed to expire at the end of the year.
According to Arensmeyer, Small Business Majority's national polls indicate that "the majority of small businesses agree the tax cuts should lapse."
"We're glad small businesses are remaining front and center through the campaign, and hope key issues affecting them are addressed in a clear and honest fashion in the final weeks leading up to the election," Arensmeyer said.