Small businesses do just fine with high taxes on wealthy

Well, lookie here. It turns out, according to this Center on Budget and Policy Priorities analysis, based on a Treasury Department study, those engines of job creation did just fine when taxes were high on the nation's wealthiest. It all depends, the report says, on how you define "small business," and the definition used by Republicans is so broad "that under it, both President Obama and Governor Romney would count as small business owners ' as would 237 of the nation's 400 wealthiest people."

Charges that any tax increases on people making over $1 million a year, such as Senator Sheldon Whitehouse's proposal to implement the 'Buffett Rule,' would inflict injury on many small businesses rest on the same misleading definition of small businesses

Contrary to these claims, an extension of the high-income Bush tax cuts would, in essence, constitute a massive tax cut for very wealthy individuals who overwhelmingly aren't small business operators.  Analysis by the Urban Institute-Brookings Tax Policy Center finds that extending the tax cuts for people over $250,000 of income ($200,000 for single filers) would overwhelmingly benefit the highest-income taxpayers:  82 percent of the value of the tax cut would flow to filers with more than $1 million in adjusted gross income, who would get an average tax cut of $164,000 a piece.

There's also actual recent history to prove that higher taxes on the wealthy don't retard business growth, at all. That would be the job creation record under Clinton's higher tax rates in comparison to business growth after the Bush tax cuts. That comparison is clear in the chart above. To make this absolutely clear, real small businesses generated jobs more than twice as effectively under the Clinton tax code than under Bush's.

Guess what else is good about letting the tax cuts for income over $250,000 expire? It's what the people want. They see it as both helpful to the economy, and to make the tax system more fair. All of which means the Senate Democrats have to stand firm on their threat to let the tax cuts expire.