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The Revolt of Small Business Republicans

By       Message Robert B. Reich       (Page 1 of 3 pages)     Permalink

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Reprinted from Robert Reich Blog

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Can it be that America's small businesses are finally waking up to the fact they're being screwed by big businesses?

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For years, small-business groups such as the National Federation of Independent Businesses have lined up behind big businesses lobbies.

They've contributed to the same Republican candidates and committees favored by big business.

And they've eagerly connected the Republican Party in Washington to its local business base. Retailers, building contractors, franchisees, wholesalers, and restaurant owners are the bedrock of local Republican politics.

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But now small businesses are breaking ranks. They're telling congressional Republicans not to make the deal at the very top of big businesses' wish list -- a cut in corporate tax rates.

"Given the option, this or nothing, nothing is better for our members," the director of legislative affairs at Associated Building Contractors told Bloomberg News. (Associated Building Contractors gave $1.6 million to Republicans in the 2014 midterm elections and nothing to Democrats.)

Small businesses won't benefit from such a tax deal because most are S corporations and partnerships, known as "pass-throughs" since business income flows through to them and appears on their owners' individual tax returns.

So a corporate tax cut without a corresponding cut in individual tax rates would put small businesses at a competitive disadvantage.

And since a cut in the individual rate isn't in the cards -- even if it could overcome the resistance of Republican deficit hawks, President Obama would veto it -- small businesses are saying no to a corporate tax cut.

The fight is significant, and not just because it represents a split in Republican business ranks. It marks a new willingness by small businesses to fight against growing competitive pressures from big corporations.

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In case you hadn't noticed, big corporations have extended their dominance over large swaths of the economy.

They've expanded their intellectual property, merged with or acquired other companies in the same industry, and gained control over networks and platforms that have become industry standards.

They've deployed fleets of lawyers to litigate against potential rivals that challenge their dominance, many of them small businesses.

And they've been using their growing economic power to get legislative deals making them even more dominant, such as the corporate tax cut they're now seeking.

All this has squeezed small businesses -- undermining their sales and profits, eroding market shares, and making it harder for them to enter new markets.

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Robert Reich, former U.S. Secretary of Labor and Professor of Public Policy at the University of California at Berkeley, has a new film, "Inequality for All," to be released September 27. He blogs at www.robertreich.org.

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