Kevin Drum did an excellent post last week debunking the idea that extending the Bush tax cuts is somehow about helping small businesses, pointing out that this is only a tiny share of what’s really going on.
That said, every time this discussion comes up I do want to urge people to resist the frame that says that insofar as a given tax cut really is a way to help small businessmen that that’s somehow super-relevant. Nothing against small businessmen—some of them do some good stuff. But so do some executives at large businesses. So do some highly paid entertainers. The point is that if you own a small business and through your small business you derive an extremely high income, then you’re a rich person. Just like a rich lawyer is a rich person and a rich basketball player is a rich person and a rich Senior Vice President at Gigantocorp is a rich person. So of course when we try to tax rich people via progressive taxes, some of the rich people who pay the tax will be small business owners. And there’s nothing wrong with that.