Progressive to fellow progressives: Learn these simple truths about business

February 9, 2020 10:12 am

Many small businesses are very small indeed. Getty Images.

I’m a lawyer who represents small businesses that do all sorts of things, from operating restaurants to landscaping to things that I don’t totally understand. Like me, many of the folks who run these businesses have progressive goals for our cities, state and country —  but they’re also passionate about running a restaurant or landscaping a yard. 

Yet some of my progressive friends and allies seem to be a little confused about business, if only because the only story they’re getting from nearly everywhere is that massive scary corporations are hell-bent on destroying the country and not paying any taxes as they do it. And to be clear, there is some legitimacy to that narrative, but there is also a great deal of oversimplification. 

So here are some actual truths about businesses: 

A corporation is just a way to organize for tax purposes. This is quite possibly the biggest misunderstanding of politicians, the media and even business owners themselves. Despite how the narrative has evolved, morally and legally there is no major difference in corporations or limited liability companies, as each simply provides a level of protection between someone’s personal assets and the assets of the company. This allows people to take a risk in starting a business but not risk every single asset to their name. (Still, most small business owners will have to sign a personal guarantee for any obligations, so that often all their personal assets are at risk, at least for the first 5-10 years.)

Other platforms for organizing a business, including co-operatives, offer the same distance from personal liability. They are a favorite of progressive politicos, but they are often very similar to a corporation or LLC — they just happen to have several owners who make decisions by consensus.

Not all co-ops are cool. There are certainly ways of organizing a co-operative that will return money (or ownership) to employees, but this is not a guarantee. And just because something is a “co-op” doesn’t mean it’s automatically more ethical than a corporation. Or that it operates really any differently or that its money is any “cleaner.”

Any organization — including co-ops — can be run in an unethical manner, and though having more employee ownership can help guard against this, not all co-ops are run as transparently as many seem to think. Many progressive candidates tout their refusal to take corporate PAC money but are fine accepting money from more corporate “co-ops” such as Land ‘o Lakes or the Southern Minnesota Beet Sugar Co-op, which spent more than $600,000 on federal campaigns last election cycle. Whether this is a false distinction is a question more of us should be asking.

Most businesses are really small. The New York Times interviewed several business owners in a January 17, 2020 article and some of them — who admittedly voted for Trump in 2016 — said they “might” vote for a Democrat this go around, but not one who seemed antagonistic to millionaires or billionaires.  Spoiler Alert: These businesses are not truly small business owners if they worry about millionaires and billionaires.

Don’t think that’s the case? Think even small corporate business owners make a killing under Trump’s tax law changes? Well, here is a stat that I’ve seen Minnesota legislators absorb in disbelief: The median income for individuals self-employed at their own incorporated business in Minnesota in 2016 was $50,209. That’s well below the median household income in all Minnesota!

These business owners are not millionaires. They don’t worry about wealth taxes. And they have more in common with employees of large corporations than they do with the folks running them. The owners of these “evil corporations” share the same concerns as most folks who favor progressive policies: universal health care, living wages, good schools and making sure all businesses — particularly large ones that often have a nearly 1000x income of the median Minnesota corporation — pay their fair share to help us pay for all of these things.

Corporations can be progressive allies. No one is more surprised by a progressive business owner than an elected official — on either side of the aisle. You wouldn’t know it if your only encounters were at election time though, because then every candidate is a “champion of small business.”   

Progressives should use their allies in the small business community more effectively as they push for policies in the face of fierce resistance from the corporate big guys. The Affordable Care Act relied on organized progressive small businesses to help push back against the large voices of big business who said the ACA was not needed. Small business owners in Minneapolis lent their voices to the Fight for $15 and earned sick and safe time, and many small business owners are leading voices for paid family leave at the Minnesota Legislature. And, shockingly, some of those same businesses are organized as corporations.

Here’s hoping that progressive candidates, organizations and movements don’t forget this in the upcoming 2020 election and reach out to these business owners to include their voices in the fight. Even if the business those potential allies operate may be organized as (dirty) corporations. 

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Davis Senseman

Davis Senseman is the founder of Davis Law Office and a member of the Mainstreet Alliance of Minnesota Advisory Board and Outfront Action Board. Davis advises small businesses, nonprofits and political campaigns and was formerly district director for U.S. Rep. Ilhan Omar.