According to last month’s National Asian American Survey [pdf], 41 percent of Asian Americans support Barack Obama while only 24 percent support John McCain. But 34 percent remain undecided. If you happen to have undecided friends or relatives, particularly those who own small businesses, feel free to pass on this last minute debunking of Republican misinformation about Obama’s tax plans.
The short version? As far as I can tell, the vast majority of small businesses that employ ten or fewer employees not only won’t see their taxes increase, but may actually reap tax benefits under an Obama Administration.
The longer version? Read on. And please post in the comments if I’ve missed anything or made any mistakes. (And non-Asians, come on in, the water’s fine! Most of this information applies to every small business owner.)
MISINFORMATION: A conservative group has been running ads claiming that Obama would tax small businesses at a rate of 62 percent.
THE FULL STORY: FactCheck.org says that’s a completely bogus claim. Yes, some individuals and businesses will see their taxes go up under Obama. But those are folks who net more than $200,000 (single) or $250,000 (married) a year. Their tax rate goes up 3 percent. For those who make more than $372,950, the tax rate goes up 4.6 percent. As I understand it, that’s just a return to the rates under Reagan. Additionally, according to the Obama website, Obama is considering asking “those making over $250,000 to pay in the range of 2 to 4 percent more in total (combined employer and employee)” Social Security payroll tax. But again, this does not appear to apply to the vast majority of individuals and small businesses.
MISINFORMATION: AsianAmericansforMcCain.org claims that the “average Asian-American family-owned small business earned $296,560, according to the 2002 Census” and that Asian Americans would thus be “particularly vulnerable to Obama’s proposed tax increases for those earning over $250,000 annually.”
THE FULL STORY:: As far as I can tell, the $295,560 number comes from Yen Le Espiritu’s “Asian American Women and Men” and refers to average “revenues,” which seem likely to be gross rather than net receipts. The actual data from the 2002 Census supports this theory. The Census information about Asian American businesses [pdf] cites 1,103,587 Asian American businesses with total sales and receipts of $326,663,445,000 for an average of $296,002 of sales and receipts per business. Those are gross sales, not taxable net income for the businesses. Deducting payroll, rent, inventory, and other typical expenses would almost certainly push the average Asian American business below the $200,000/$250,000 level at which any Obama tax increases kick in.
MISINFORMATION: AsianAmericansForMcCain.org cites an ABC blog posting entitled “Obama Fuzzy on Small Businesses’ Exemption” to imply that Obama’s health care plan could adversely affect Asian American small business owners.
THE FULL STORY: It’s true that under the Obama plan, larger businesses that don’t provide any health care for employees would be required to contribute towards a national fund. Obama has not specified how much would be required — although according to the New York Times, some economists estimate that it might be 6 or 7 percent of payroll.
But Obama has said that small businesses would be exempt from this additional payroll tax. And small businesses that already provide health care plans would benefit under Obama by getting a refundable 50 percent credit towards health care premiums for employees. Exactly what constitutes a small business under this definition hasn’t been fully defined, but in the very blog post cited by AsianAmericansforMcCain.org, an Obama rep said that the cutoff would be larger than ten employees. So businesses with fewer than ten employees will definitely not be subject to the new tax and would even get a tax credit to help provide health insurance. The Obama plan would also help small businesses deal with catastrophic health care costs “if they guarantee such savings are used to reduce the cost of workers’ premiums.” For more about the Obama plan, check out this pdf.
Finally, the lower cost of health care due to the Obama plan could lead to a net savings for business and an increase in jobs. Obama’s advisors estimate that as a result of the plan, “annual business-sector costs will fall by about $140 billion” and “the lower cost of benefits will allow employers to hire some 90,000 low-wage workers currently without jobs because they are currently priced out of the market.”