Fact Checking the GOP Speeches
The speakers at this week's 2012 Republican National Convention--whose political all-star lineup included Vice Presidential nominee Paul Ryan, former Secretary of State Condoleezza Rice, and New Jersey Governor Chris Christie--had a lot to say about small business. But their grasp of the facts has been somewhat slippery.
In a campaign season where the truth can be hard to ascertain, Inc. decided to do a small business reality check.
- "We will champion small businesses, America's engine of job growth. That means reducing taxes on business, not raising them." --Mitt Romney, August 30 speech to the RNC
Most small business owners would actually receive a tax break under President Obama's plan. President Obama wants to extend tax cuts for individuals making $200,000 or less and married couples earning $250,000 or less--but the average "S corp" filer had only $106,000 in income, according to the most recent Internal Revenue Service data. (S corps are the the most common corporate structure.)
On the Affordable Care Act
- "Obamacare will create new taxes for 1 million small businesses."--Rep. Paul Ryan (R-Wis.), August 29 speech to the RNC
Under the Affordable Care Act, companies with 50 employees or more must make a "shared responsibility" payment per employee of between $2,000 and $3,000 if the owner doesn't provide health care insurance or an affordable option for coverage.
But that won't matter to the 95% of small companies in the U.S. that have fewer than 50 employees; in fact, 90% have fewer than 20 employees, according to the Kauffman Foundation. According to the most recent census data, there are actually only about 500,000 "establishments" with 50 to 499 employees. The Small Business Administration defines a small business as having fewer than 500 employees.
Moreover, small busineses with up to 25 employees--which is to say, most small companies--would also receive a tax credit for offering health care to their workers.
On the Stimulus
- [Stimulus money] "went to companies like Solyndra, with their gold-plated connections, subsidized jobs, and make-believe markets. The stimulus was a case of political patronage, corporate welfare, and cronyism at their worst. You, the working men and women of this country, were cut out of the deal."--also from Ryan's speech.
Some $230 billion of stimulus (almost 30%) actually went to individuals and workers, including employees of small business owners--who got more than $116 billion from the Making Work Pay tax credit alone, according to the Joint Committee on Taxation. Business owners got a further $61 billion in tax incentives.
On Government Regulations
- "My concern is that President Obama is making it very difficult for small businesses to get started--to create jobs--and to survive.I hear this all the time from the small business owners I speak with ...The Obama administration wants to bury them with rules, regulations, and red tape."--Sen. Kelly Ayotte (R-N.H.), August 29 speech to the RNC
- "A Gallup report recently said that nearly 50% of small business owners aren't hiring because of what they call 'regulatory uncertainty.'"--Sher Valenzuela, running for lieutenant governor of Delaware, August 29 speech to the RNC
Actually, the most recent Inc. 500 CEO survey shows that entrepreneurs don't care that much about government regulations: Regulations polled near the bottom of top concerns about what could hinder growth. And in the Gallup report cited by Valenzuela, regulations came in sixth out of eight top impediments.
And the regulations that do concern business owners tend to be state and local laws, not federal regulations, according to research from Kauffman and Thumbtack.com--a website that connects entrepreneurs with customers seeking their services. (In general, federal regulations don't become an issue until companies get bigger.)
Licensing is a costly burden--but again, it tends to be a state and municipal issue, and not under Obama's control. In late 2011 Thumbtack worked with the Kauffman Foundation to survey more than 6,000 entrepreneurs about the "business friendliness" of their states. State licensing regulations emerged as one of the top concerns for those companies, ahead of taxes.
Professional licensing requirements by state and local governments have also undergone a significant expansion over the years. About 30% of the U.S. workforce and 800 professions require some form of license today, up from 4.5% in the 1950s, according to Morris Kleiner, a professor at the Humphrey School of Public Affairs at the University of Minnesota.