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Small Businesses Already Slipping Off The 'cliff'

"It's an embarrassment to the country. It's an insult to my intelligence," he says.

During the presidential campaign, Republican candidate Mitt Romney contended that small business owners would be hit so hard by the scheduled increase in the top tax rate â¿¿ a jump from 35 percent to 39.6 percent â¿¿ that they'd stop creating jobs. That rate would affect single taxpayers who earn $200,000 or more and households that earn $250,000 or more. But Democrats and advocacy groups including Small Business Majority say the number of business owners who would be affected by that increase is less than 5 percent.

"This is a myth that just continues to get life without any substantiation," says Rep. Gwen Moore, D-Wis. She says the bigger issues are the 2 percent payroll tax cut and unemployment insurance extension. If they're allowed to die, she says, businesses like Jones' Five Guys franchises will suffer.

"That's the bottom line â¿¿ how many people are going to be out eating those burgers and fries," she says.

Edna Abernathy, who owns two businesses in Moore's district in Waukesha, is also concerned about the payroll tax cut because of the impact it will have on her staff. If it disappears, workers will end up paying as much as extra $2,000 to the government, essentially giving them a pay cut. Abernathy says she will try to replace the lost money for her employees at E.R. Abernathy Industrial Inc., which sells janitorial, safety and other supplies to other businesses, and Abernathy Consulting Ltd., an information technology consulting firm.

"We're going to have to try to make it up with more business, and we are looking at that as we prepare for the new year in terms of marketing strategies â¿¿ how can we go after more market share?" she says.

She's looking toward 2013 with some trepidation, because she says many of her clients, which include companies in the Fortune 500, have been cutting back. "It's disheartening. Normally we look at the new year with a lot of enthusiasm," Abernathy says.

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