Tuesday, May 22, 2018
Politics

PolitiFact: Trump is no small business, despite Obama's assertion

The statement

"Under Gov. Romney's definition … Donald Trump is a small business."

Barack Obama, in Wednesday's presidential debate

The ruling

Donald Trump is a tycoon who owns luxury high-rises, builds fancy golf courses and stars in a reality TV show. Is it also possible that "The Donald" is actually a small-business man? President Barack Obama says that's how Mitt Romney would treat him.

During the first presidential debate in Denver, Obama attacked Mitt Romney over what constitutes a small business.

"Gov. Romney and I do share a deep interest in encouraging small-business growth," Obama said. "So at the same time that my tax plan has already lowered taxes for 98 percent of families, I also lowered taxes for small businesses 18 times. And what I want to do is continue … the tax cuts that we put into place for small businesses and families."

Obama continued, "We do have a difference, though, when it comes to definitions of small business. Now, under my plan, 97 percent of small businesses would not see their income taxes go up. Gov. Romney says, well, those top 3 percent, they're the job creators. They'd be burdened. But under Gov. Romney's definition, there are a whole bunch of millionaires and billionaires who are small businesses. Donald Trump is a small business."

To explore what it means to be a "small business," we'll first discuss whether Trump's companies meet the definition set by the Small Business Administration. Then we'll examine whether Trump would be eligible for a small-business tax cut under Romney's plan.

The definition of "small business" is more complicated than you might think. The most common rule of thumb is 500 employees. But for loans and other programs, the SBA uses a more complicated standard. The company has to be independently owned and operated and "not dominant in its field." Depending on the industry, the threshold can be either an average number of employees for the past 12 months or a three-year average of revenues.

So how do Trump's companies measure up? The Trump Organization, the developer's flagship company, had 22,450 employees in 2007. Several other resort and casino holdings have thousands of employees each, though it's unclear whether there is overlap among all of these entities.

Now, it's possible that some Trump businesses could still qualify as small by the SBA's definition.

However, even if Trump managed to meet the technical definition of a small business, it's not accurate to say that Romney's tax proposal would treat him as a small business.

This highlights a fundamental difference in the candidates' approaches to tax policy.

Obama has targeted small businesses by offering at least 16 tax cuts based on a company's size, frequently limiting the taxes to companies much smaller than the SBA's 500-employee standard. Romney, by contrast, has sought to help small businesses through lower marginal tax rates for individuals. Romney calls lower rates "incentives for job-creating businesses."

Why does this matter? Because if Trump ends up getting a cut from Romney, it would be because he's a taxpayer, not because Romney "defines" him as a small businessman.

We rate Obama's claim False.

This ruling has been edited for print. Read the full version at PolitiFact.com.

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