I have News for the New York Times

By Richard N. Weltz

Nobody disputes the appropriateness of the New York Times having and publishing its own opinions, especially on its editorial page (even though they manage habitually to take the wrong side of almost every issue).

When such expressions of opinion, however, contain statements that are paraded out as being fact, those "facts," whether stated literally or implicitly ought not to be false or misleading.

In Thursday's lead editorial, damning Republicans for their opposition to allowing an increase in income tax rates, the Times raises a question with very clear implications:

Mr. Boehner's much professed concern for small businesses is misdirection. The tax cuts that Mr. Obama would let expire would affect very few owners of small businesses -- how many do you know who make more than $250,000 a year? -- by any common-sense definition of that term.

I have news for the Times editorial board: every small business* I know makes more than $250,000 a year -- and I know hundreds, maybe thousands, of them and their proprietors through my decades of work in small business as an owner/manager, accredited consultant, officer of local and international trade associations, and author of a publication of small business financial management. To be fair, perhaps some very small businesses, the local shoe shine parlor for example, don't meet that threshold; but tens of thousands of what are generally considered small businesses in America do. In fact, many could not survive long without earnings in that range or higher.

The "gimmick" in the Times's remark is that most people don't realize that a huge percentage of small businesses pay their federal income taxes as "S-Corporations," named for Subchapter S of the tax code. That is, to avoid double taxation of profits, the owners pay income tax at their own personal rates on all earnings, whether or not those earnings are distributed to the owners or left in the company to finance working capital and growth.

What a small business "makes" is not the same thing as what those owners who work there are paid as salary, and therein lies the deception.

The tax rates that Mr. Obama would let expire would affect a great many owners of small businesses, and very adversely at that by allowing them or their companies to keep a smaller share of earnings for reinvestment, job creation, and eventual (if they're fortunate) payout to those owners whose capital is at risk.

With a Nobel Laureate economist right on the opinion pages' staff, you'd expect the Timesers to know better (well, maybe not, as the guy's a bit cuckoo); but there still is no excuse for painting such an inaccurate picture of a part of the economy that Mr. Obama wants to savage. Perhaps, like their idol in Washington, the paper's editorial writers are simply ensconced in too lofty a perch from which they can see and understand the operation of that huge part of the U.S. economy known as "small business," and which is also known as the major engine driving job creation in our nation.

Judging by the Times's financial performance since the ascendancy of the current Sulzberger, perhaps the operation of large business isn't too well understood at Pinch's Palace either. (Perhaps that's why Wednesday saw the Times Company's stock rise on rumors of a takeover by Mexican billionaire Carlos Slim.)

* "Small businesses" are such an important part of the U.S. economy that there is a separate federal agency, the Small Business Administration, devoted entirely to them. That agency sets the standards, either according to total receipts or number of employees, for what is considered "small." This varies by industry, but many thousands of firms with total receipts of over $30 million or employing 500 or more qualify for this designation.