Statistics about Business Size (including Small Business)
[Guest post by DRJ]
At tonight’s Town Hall Presidential debate, I think Barack Obama said this about his tax policies [EDIT: according to the CNN transcript]:
“Only a few percent of small businesses make more than $250,000 a year. So the vast majority of small businesses would get a tax cut under my plan.”
The US Small Business Administration (SBA) defines a “small business” according to its average annual receipts or the number of its employees. Here are examples from the SBA’s Table of Small Business Size Standards setting forth the maximum average annual receipts by industry that a business can have and still be classified as a small business:
Crop production of all types — $750,000
Animal production except for cattle & chicken/eggs — $750,000
Cattle feedlots — $2.5M
Chicken/egg production — $12.5M
Forestry & logging — $7M
Fishing — $4M
Irrigation, sewage, water supplies — $7M
Housing construction — $33.5M
Heavy and civil engineering construction — $33.5M
Dredging and cleanup — $20M
Concrete, framing, and other housing contractors — $14M
Car dealers — $23-29M
RV, motorcycle, & boat dealers — $7M
Furniture, hardware, clothing & sporting good stores — $7M
Electronic stores — $9M
Supermarkets, gas stations & department stores — $27M
Pharmacies — $7M
There are many more examples at the link. In addition, most of the industries in the Table — such as manufacturers of food, beverages, apparel, print, oil/gas, plastics, plumbing, machinery, computers, electronics, electrical, transportation, and furniture — are considered small businesses based on their total number of employees instead of average annual receipts. In those industries, the cut-off between small and large businesses ranges from 500-1,000 employees per business/industry.
It’s difficult for me to imagine a business that has 50 or more employees (let alone 500-1,000) that has receipts of less than $250,000 per year. And, given the SBA definitions of “small business,” it seems likely that many small businesses in a wide range of industries have receipts of more than $250,000 per year.
If so, it is appalling that Obama would imply that, if he is President, a small percentage of businesses exceed the $250,000 per year cut-off for increased taxation under his tax plan. In fact, the number of businesses subject to additional tax may be large and could well be the 50% number I think John McCain mentioned.
Small businesses are vital to the American economy and Americans’ livelihoods, and it sounds like Obama wants to tax as many as he possibly can.