(Read more: Revisiting President Obama's Small-Business Tax Cut Claims )
Let's look at the share of employment first, Mr. Romney's charge that letting the Bush tax cuts expire for the top two tax brackets will specifically hit businesses that employ half of all the people who work in small businesses and a quarter of all American workers. The Romney campaign declined to discuss its source, but the assertion closely echoes a figure circulated by the N.F.I.B., when the advocacy group sent a letter to Congress two years ago opposing any tax increases, including on the wealthy.
That letter said, in part: "Based on an N.F.I.B. small-business survey, the businesses most likely to face a tax increase by raising the top two rates are businesses employing between 20 and 250 employees. According to U.S. Census data, businesses with between 20 and 299 workers employ more than 25 percent of the total work force."
There are two things to say about this statement, as retold by Mr. Romney. First, there is the obvious error of transmission in his retelling — that these companies account for a quarter of the work force, when in fact the Census Bureau cohort included companies with up to 299 employees (not 250). But the bigger issue is the implication that all of these businesses (by Mr. Romney in the debate) or most of them (by the N.F.I.B. in its letter) face a tax increase under the Obama plan.
The $250, 000 threshold
In fact, the survey (pdf) at the root of the claim suggests the opposite — that a minority of these businesses in this size category, about 22 percent of them, earned more than $250, 000 in business income, the threshold for higher taxes under the Obama plan. According to the Census Bureau figures that the N.F.I.B. relied on (available from the S.B.A.), in 2007, when the N.F.I.B. poll was taken, businesses with 20 to 299 employees employed almost 28 percent of the total work force. Assuming that the N.F.I.B. survey results can be extrapolated to the broader small-business population*, 22 percent of 28 percent is 6 percent. That means that, according to the N.F.I.B. survey, the share of the total work force that might be affected by the increase in tax rates is around 6 percent, not 25 percent.
(Interestingly, in an interview for this post, an N.F.I.B. tax lawyer, Chris Whitcomb, seemed to back away from the claim that most of the small businesses likely to face the tax cut are those that employ 20 to 250 workers. Referring to the passage in the N.F.I.B.'s letter to Congress that cited the survey, Mr. Whitcomb said, "All that statement is saying is that looking at this survey data, of businesses that have 20 to 249 employees, 22 percent of those have a business income above $250, 000. The conclusion that we're drawing from that is that this group will be disproportionately impacted by raising those rates.")
As for Mr. Romney's suggestion that the tax increase will affect companies employing half of the people who work at small businesses, that also is not accurate. In 2007, according to the Census data, companies with 20 to 299 employees employed 55 percent of the total work force at companies with fewer than 500 workers, a common definition for a small business. But given the N.F.I.B. survey's finding that only 22 percent of businesses in roughly that size range would actually face a tax increase, those businesses' share of the small-business work force would be only about 12 percent.
Mr. Romney's larger point is that the 4 percent increase in taxes on small businesses making more than $250, 000 a year will cause these profitable companies to cut jobs - 700, 000 employees in all, he said. For this assertion, Mr.Romney again relies on the N.F.I.B., and a recent analysis by the accounting firm Ernst & Young, commissioned jointly by the Independent Community Bankers of America, the N.F.I.B., the S Corporation Association, and the United States Chamber of Commerce. The analysis does indeed claim that raising taxes on those making more than $250, 000 will cost the economy 710, 000 jobs.