small business data/notes

Regression Models of Establishment Employment Change

The tables in the preceding section show what has happened in terms of establishment employment

change by firm size between 1992 and 1996. They do not, however, provide any insight into the determinants

of establishment employment change. Regression analysis is a statistical technique that can be used to explain

the variation in one variable--in this case, relative establishment employment change--resulting from variations

in one or more related, explanatory variables. For policy analysis purposes, it would be useful to have data

on explanatory variables pertaining to policy instruments, such as business income tax and employment tax

rates. Unfortunately, the BITS doesn't currently contain such data, but it does contain data on variables known

to affect employment change--viz., base-year establishment age, employment size, and location (including

state, region, and MSA).

http://www.sba.gov/ADVO/laws/flex/rfrguide.html

Information on business profits from IRS is elusive. For sole proprietors and partnerships, only data on net income are available. Statistics on the preferred variablesþreturn on assets or return on investmentþare not obtainable directly from the tax return; they may be found only in balance-sheet information.

For small business corporations, data are more readily available. The IRS' Source Book for Corporations contains data for corporations by asset size class. Balance sheet and income statement information is available for corporations in about 15 different asset classes. From these detailed data, it is possible to calculate rates of return on assets as well as the profits of small business (generally subchapter S) corporations. Data on Self-Employed Persons Each year, the March Current Population Survey (CPS) of the Bureau of the Census asks a series of expanded questions about self-employed persons as part of its firm size supplement. These questions include the hours and weeks spent working in the business during the previous year, the income earned, the demographics of the business owner, whether the firm (owner) has or provides benefits and several related questions about the industry of the firm.

Private Data Sources The Kauffman-Ernst & Young Data Base of Fast Growth Companies (KEYFGC) is a promising new data base that relies on data from two sources: the accounting firm of Ernst and Young (for employment and sales information) and the Dun and Bradstreet Corporation (for financial data). Four years of information are currently available on each firm, including income statement and balance sheet information. The major promise of this data base is the ability to understand where and how fast growing companies develop over timeþincluding their detailed locations and industries. In addition, the KEYFGC data set is one of the only data bases with actual financial data available on individual (but unidentified) companies.

http://www.sba.gov/advo/stats/wkp03co.pdf

Trying to connect Sales to Employees, but they don't seem to fit together? I don't get it.

http://www.bls.gov/opub/mlr/2000/04/art3full.pdf

1998

58.1% of private sector employees worked for firms 500 or under

67 million employees

http://148.129.75.160/paper.php?paper=100136

1985

According to the Small Business Administration (SBA), there
was 15.3 million businesses operating nationwide in 1985. 4
Nearly one third of these "firms" consisted of individuals--
utilizing no paid employees--who were pursuing self-employment on
a part-time basis.

According to Birch, "there are about seven million
companies, close to 90 percent of which employ fewer than 20
workers." His definition of "small business" and "company" are
not precisely stated.

Firms with fewer than five employees accounted for 76.3 percent
(table two) of the small business employers and these same
businesses accounted for 28.1 percent of the employee total.

Firms with 20 or more employees made up 3.4 percent (table two) of the employer universe, and 33.9 percent of the small business employee pool worked for these same firms.

http://www.sba.gov/advo/stats/sbfaq.html

Represent more than 99.7 percent of all employers.
Employ more than half of all private sector employees
Pay 44.5 percent of total U.S. private payroll.
Generate 60 to 80 percent of net new jobs annually.
Create more than 50 percent of nonfarm private gross domestic product (GDP).
Supplied 22.8 percent of the total value of federal prime contracts (about $50 billion) in FY 2001.
Produce 13 to 14 times more patents per employee than large patenting firms. These patents are twice as likely as large firm patents to be among the one percent most cited.
Are employers of 39 percent of high tech workers (such as scientists, engineers, and computer workers ) .

Are 53 percent home-based and 3 percent franchises.
Made up 97 percent of all identified exporters and produced 29 percent of the known export value in FY 2001

http://www.jaxworks.com/
Of the nearly 10.3 million workers designated as self-employed, only 16.9 percent had other paid employees in 2003, according to a new study by the Bureau of Labor Statistics.

http://www.bls.gov/opub/mlr/1994/10/art3full.pdf

1992

http://www.census.gov/prod/ec97/e97cs-1.pdf

1997

SIZE OF FIRM

All firms with paid employees accounted for 25.4 percent of the total number of firms and 96.5 percent of gross receipts. There were 95,654 firms with 100 employees or more which accounted for $12.7 billion in gross receipts (70.9 percent of the total receipts of all employer firms). There were 1,050,379 firms in the U.S. with gross receipts of $1 million or more. These firms accounted for only 5.0 percent of the total number of firms but 90.9 percent of the total gross receipts. Thirty-five percent of all U.S. firms had gross receipts of under $10,000.

http://www.nfib.com/object/2725310.html

NFIB research shows that at least 85 percent of America's small-business owners pay individual income taxes, as opposed to corporate taxes, on the money they make in their shops and would be directly helped by the tax relief in today's bill.

http://www.taxfoundation.org/press_releases/2004-8-05_Business-Income.html

55% of all taxes paid by business owners

http://www.nolo.com/lawcenter/ency/index.cfm/catID/19B45DBF-E85F-4A3D-950E3E07E32851A7#3FED35C1-7BBA-4468-901354F101CBEBE2

taxes on a small business etc… how to structure your small business to avoid taxes

http://www.smbiz.com/sbw1119.html

how for asmall bsiness to beat taxes

http://www.nfib.com/page/researchFoundation

(under trends)

http://www.cfib.ca/legis/manitoba/pdf/MB_2001_pre-budget_submission.pdf

Canada study show small businesses hate rising personal income tax rates

http://www.cfib.ca/research/reports/nb_primer_04_e.pdf

Another Canada small business paper, good clear graphs and charts on a lot of things (not tax and employment tho). very illustrating generally.

http://www.inlandrevenue.gov.uk/pdfs/bathv1.pdf

in-depth British study on the hassle of compliance and paper work, small firms stuck with high costs

http://www.sba.gov/advo/research/rs206tot.pdf

As before, it is useful to provide a more direct measure of the impact of changes in tax

rates. Our results imply that a five percentage point increase in marginal tax rates leads to a 9.9

percent decline in the mean investment expenditures. In short, changes in the user cost of capital

induced by increases in marginal tax rates have a substantial impact on entrepreneurs’

investment spending.

But there is little research on the factors that determine entrepreneurs’

hiring decisions. In particular, not much is known about the effect of an entrepreneur’s personal

income tax situation on his or her hiring decisions. A popular belief is that tax increases inhibit

entrepreneurs from hiring labor. For example, after taxes were increased in 1993, Rigby [1994]

quoted an entrepreneur who planned:

to reduce his labor force of 40 people to pay his firm’s increased taxes... “...we will find ways to reduce labor costs. We may have to cut some people and give overtime to others to do their work.”

As in the other studies discussed in this section, we investigate the hiring decision using

data that are drawn from the Statistics of Income Individual Tax files for 1985 and 1988. Here

we focus on individuals who filed a Schedule C in both 1985 and 1988, of whom there are

6,078.31 Sole-proprietors do not report the number of workers they employ on their Schedule C.

However, they do report their wage bill. Whether the wage bill is positive or zero tells us

whether the entrepreneur has hired any labor.

Statistical Analyses. The complete set of results for our model of labor demand by

entrepreneurs is in Appendix Table 3.6. The key finding is that the greater the percentage

increase in a sole-proprietor’s tax price (i.e., the greater the decline in the tax rate), the more

likely that he or she hired some labor. Moreover, as in our other analyses, we are able to rule out

the possibility of reverse causation; these estimates reflect the impact of the tax code on hiring

decisions and not the reverse. Moreover, our results are not sensitive to the particulars of our

decisions on the sample size and composition, specification of the variables under study, or

statistical procedures.

To assess the quantitative significance of our results, we use the model to simulate the

impact of a 10 percent rise in the tax price. For example, the top bracket rate currently is 39.6

percent. Reducing this rate to 33.2 percent would generate a 10 percent rise in the tax prices

faced by entrepreneurs in this bracket. The simulation results indicate that the tax rate reduction

increases the mean probability of employing labor from 0.215 to 0.241, or 12.1 percent, implying

an elasticity of 1.21. It appears that marginal tax rates have a substantial effect on the propensity

of entrepreneurs to hire workers.

http://www.datacards.com/LIS/LIS74986.htm

(only businesses that sign up with them, from surveys)

Annual Sales:

    Under $1 Million                    124,095

      $1 Million - $2.5 Million          31,540

    $2.5 Million -   $5 Million          17,246

      $5 Million -  $10 Million          10,646

     $10 Million -  $25 Million           6,663

     $25 Million -  $50 Million           1,687

     $50 Million - $100 Million             642

    $100 Million - $250 Million             120

    $250 Million - $500 Million              13

    Over $500 Million                        12

Number of Employees:

    Under 10                            112,661

       10 -    24                        42,235

       25 -    49                        19,943

       50 -    99                        10,221

      100 -   249                         5,586

      250 -   499                         1,507

      500 -   999                           257

    1,000 - 2,499                           235

    2,500 - 4,999                            10

    Over 5,000                               12

http://www.financial-planning.com/pubs/fpi/20010509101.html

(rehash of what we know, both sides spin)

In support of the 33% solution, the Treasury Department on Monday released an analysis indicating that 77% of the tax relief triggered by cutting the top rate would go to small business owners and entrepreneurs, including farmers, partnerships and sole proprietorships.

The department also estimated that small businesses make up about 800,000 of the 1.3 million tax returns that would benefit from the lower 33% rate. Both estimates assumed the plan was fully phased in, which under a House-passed bill backed by Bush would occur in 2006.

However, the labor-funded Citizens for Tax Justice conducted its own analysis of Treasury and IRS data, and estimated that about 6.5 million business owners are already paying income taxes at the lowest 15% rate. Another 2.8 million are not subject to the tax at all because their incomes are too low.

http://www.kc.frb.org/publicat/econrev/pdf/3q96golo.pdf

Fraction of.. (smaller assets, less liekyl to make a profit)