The Treasury Department’s Office of Tax Analysis has released Methodology to Identify Small Businesses and Their Owners:

Due to data constraints and the lack of clear definitions, prior analyses of the tax code’s impact on small business owners were flawed. In this paper, we develop a methodology to define and identify small businesses. We then apply that methodology to a new data source to identify the individual owners of those small businesses. Having matched owners to their small business entities, we present tabulations that detail various tax characteristics of small businesses and their owners for tax year 2007. …

For tax year 2007, our previous methodology counted 34.7 million filers reporting $662 billion of net flow-through business income as small business owners. Using our revised methodology, we count 20.0 million filers reporting $376 billion of net business income as small business owners under a broad measure of small business owner. Under our narrow definition, we count 9.4 million filers reporting $335 billion of net business income as small business owners.

• The Hill, Treasury Looks to Redefine Small-Business Label
• Wall Street Journal, Using New Definition, US Treasury Report Finds Fewer Small Businesses