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  • The authors are Steve King and Carolyn Ockels. Steve and Carolyn are partners at Emergent Research and Senior Fellows at the Society for New Communications Research. Carolyn is leading the coworking study and Steve is a member of the project team.

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September 20, 2011

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tax relief attorney

The government should understand how to help small businesses drive economic growth and employment because it assesses the impact of tax increases on small business with political rather than economic measures.

Darrell Glasco

Thanks for taking the time to respond. I am a subscriber to your blog and have always found your information informative, well thought out and accurate. I will share your comments with my friend as well as encourage him to read your blog.

BTW, I used to bank venture funds at Silicon Valley Bank at noted point #1 to him already.

Steve

Darrell: A couple of points:

1. I didn't say most new businesses are C corps, I said most gazelles (high growth firms) are C corps. The main reason for this is most institutional investors (VCs)will only invest in C corps because of the investors protections they provide.

2. There are a lot of S corps - about 3.4 million in the U.S. - and yes they pass through their earnings.

But relatively few C corps generate more than $250,000k in earnings per owner and most S corps do not grow rapidly in terms of hiring employees.

3. For those S corps that do generate more than $250k per owner my point (2) above comes into play. The tax increase is simply not large enough to have a major hiring impact.

Tell your friend we live in the real world (I've founded or cofounded 4 startup businesses) and we're philosophically anti-tax.

But as our tagline says we do fact-based analysis and the numbers simply don't support the idea that a minor increase in marginal rates for high income earners will have a major impact on job creation.

Darrell Glasco

I provided comments earlier that I agreed with your article. I liked the article so much that I forwarded to a friend of mine who owns a small business.

I am copying his response below to your article (not mine). If you have time can you provide your thoughts to his comments. I realize in your article that you were talking about Gazelles that produce most of the jobs however the law could have a major impact on small businesses if most are S-Corps. Below are his comments.
--------------------------------------------------------
I read this article and found the premise that most new business to be C-Corp a major error. The vast majority of all new Corp. are S-Corps where the income of the Corp and personal income is one and the same. C Corps have not been popular for over 20 yrs. For this group to put out this information shows how little they know of the real world. Over 90% of all new small business that incorporate are S-Corps. The $250,000.00 limit for increased
taxes for an individual with a S-Corp will have a major effect on hiring.

restaurants in Laguna Philippines

Many of the small business owners that make more than $500k a year own businesses that tend not grow in terms of employment. Many professional services firms fall into this category as do many financial services firms and real estate investment firms. Small changes in tax rates will not have a major impact on hiring at these firms. I really agree with this. you were right.

Alvin

Professional Blogger

Thanks for the insight. Are there enough $1 million or even $5 million plus earners out there to have a significant impact on tax revenue? If so, this may be where the decision starts to make sense...

Darrell Glasco

Finally someone has put together some unbiased facts and common sense to the tax debate regarding its impact on small businesses. Unfortunately, facts will not matter to most people who have already made up their minds on this matter.

I enjoy your writing and your subject matter.

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