File photo, Keith Olbermann in his MSNBC office, 11/10/08. (photo: Chester Higgins Jr./NYT)
25 September 10
Report: Big business turns small for tax purposes.
ome firms with billions in revenues get to pay less tax than traditional corporations.
A number of companies with multi-billion dollar revenues have been registered as small businesses for tax purposes, according to a report.
Among them were the "biggest companies in the world and the richest people in this country" Keith Olbermann said in a special report on his msnbc cable show Wednesday night titled, "Small Business in Name Only."
The term "small business" was an "utter misnomer," he claimed.
Because IRS tax returns are not public record, the names of companies were ascertained from public documents such as court records or the companies' postings:
Among the examples given on "Countdown with Keith Olbermann" were:
• Enterprise Products Partners, L.P., a pipeline company with 2009 revenues of $25 billion.
• Kohlberg Kravis Roberts & Co., a Wall Street firm with $445 million in revenue in 2009.
• Price Waterhouse Coopers, an accounting firm with $26 billion in revenue in 2009.
• Koch Industries, a conglomerate of partnerships with 70,000 employees.
• The Hillman Company, an investment founded by billionaire philanthropist/industrialist Henry Hillman.
• Venn Strategies, Inc., whose chief operating officer is Brian Reardon, a former special assistant to former President George W. Bush.
• Ferrellgas, a propane and propane accessories business, with $2 billion in revenues in 2009 and 1 million customers.
• CoorsTek, a ceramics manufacturer founded by Adolph Coors, with 2009 revenue of $549 million.
• Dead River Co., with $500 million in revenue and 1,200 employees.
• McIlhenney Co., the Tabasco maker, with $250 million in revenue in 2007.
The revelation comes as Democrats and Republicans debate tax cuts and the economy.
President Barack Obama and most of his fellow Democrats want tax cuts enacted under former President George W. Bush to be extended only for the first $200,000 of a person's income or $250,000 for a family, saying the country cannot afford the cuts for higher earners.
Republicans want the lower rates renewed for all Americans, regardless of income, and say that losing the cuts would hurt small businesses and job creation just as the economy is recovering from its worst recession since the 1930s.
On CBS' "Face The Nation" on Sept. 12, Rep. John Boehner, R-Ohio, conceded that a nonpartisan Joint Committee on Taxation found that 3 percent of small-business people would be impacted if Bush tax cuts for the rich would expire.
"Well, it may be 3 percent, but it's half of small business income," House minority leader told Bob Schieffer. "Because, obviously, the top 3 percent have half of the gross income for those companies that we would term small businesses. And this is why you don't want to punish these people at a time when you have a weak economy."
Fewer than 750,000 people, less than 0.25 percent of the country, would be affected by the top rate, according to Joint Committee on Taxation figures quoted by Olbermann.
Owners of such businesses would benefit from continuation of Bush era tax cuts due to expire at the end of this year.
Rather than paying corporate taxes, the firms operate as S Corporations, sole proprietorships or partnerships, including limited liability companies that put LLC instead of Inc. at the end of their names.
All are considered pass-through structures, in which company profits are passed directly to individual owners, who then pay taxes.
Traditional corporations pay taxes on profits and pass along dividends to individuals, who pay taxes on the dividends.
Olbermann explained the rules for classification as a small business.
"It's not the income that's small, it's not the number of employees that's small, it's just the total number of owners that's small," Olbermann said.
In the case of S corporations, the total number of owners can be 100, he said.