Still True: Obama Plan Won't Raise Taxes On 97% Of Small Businesses


Fox News contributor Marc Thiessen falsely claimed that 90 percent of small businesses would face a tax hike under President Obama's tax plan. Official estimates and independent analysts agree that Thiessen is wrong, and thatonly about 3 percent of businesses make enough profit to face the proposed higher rates.

Fox Contributor Tells Viewers Obama Proposed A Tax Hike For 90 Percent Of Businesses

Thiessen: Obama "Has Just Proposed To Raise The Taxes Of 90 Percent Of The Businesses In This Country." From Fox News' America Live:

THIESSEN:  Well, you know what, if everything was as great as Simon said, then why do 55 percent of the American people disapprove of Obama's handling of the economy? Sixty-four percent, according to the New York Times/CBS poll, said -- blame his policies for making the economy worse. And the fact is, you say he gave a tax cut to small businesses. He has just proposed to raise the taxes of 90 percent of the businesses in this country by letting the top rates expire. So I think he needs to go around and spend a little more time--

SIMON ROSENBERG (founder, New Democrat Network): By the way, that's just false. The Republicans have got to stop using -

THIESSEN: -- listening to business executives instead of demonizing them on the campaign trail.

ROSENBERG: -- you guys have got to stop using that statistic. Only 3 percent of business owners will get a tax increase under President Obama's proposal. It's a ridiculous reading of economic data, Marc --


THIESSEN: That's absolutely not true. If you're a small business and you file as an individual, and the individual rate goes up, you pay more. That's just factually correct, Simon.

ROSENBERG: -- Marc, come on, you know better than that. Marc, come on, you know better. [Fox News, America Live, 7/19/12]

Returning To Previous Rates Won't Raise Taxes On Overwhelming Majority Of Small Businesses

Joint Committee On Taxation: 3.5 Percent Of Small Business Taxpayers Will Have "Marginal Rates Of 36 Or 39.6 Percent Under The President's Proposal." A memorandum from the Joint Committee on Taxation, a congressional panel that analyzes tax proposals, explains that "3.5 percent of all taxpayers with net positive business income" will face higher rates. All other small businesses that pay taxes as an individual will pay the lower rates. From the Joint Committee On Taxation:

The staff of the Joint Committee on Taxation estimates that in 2013 approximately 940,000 taxpayers with net positive business income (3.5 percent of all taxpayers with net positive business income) will have marginal rates of 36 or 39.6 percent under the president's proposal, and that 53 percent of the approximately $1.3 trillion of aggregate net positive business income will be reported on returns that have a marginal rate of 36 or 39.6 percent. [Joint Committee On Taxation, 6/18/12]

Tax Expert Gale: "The Vast Majority Of small Businesses Will Be Unaffected" By Higher Rates On Top Earners. William Gale, co-director of the Urban-Brookings Tax Policy Center, writing in the Washington Post, explained how the idea that "allowing the high-income tax cuts to expire would hurt small businesses" was a "myth." From the Washington Post:

If, as proposed, the Bush tax cuts are allowed to expire for the highest earners, the vast majority of small businesses will be unaffected. Less than 2 percent of tax returns reporting small-business income are filed by taxpayers in the top two income brackets -- individuals earning more than about $170,000 a year and families earning more than about $210,000 a year.

And just as most small businesses aren't owned by people in the top income brackets, most people in the top income brackets don't rely mainly on small-business income: According to the Tax Policy Center, such proceeds make up a majority of income for about 40 percent of households in the top income bracket and a third of households in the second-highest bracket. If the objective is to help small businesses, continuing the Bush tax cuts on high-income taxpayers isn't the way to go -- it would miss more than 98 percent of small-business owners and would primarily help people who don't make most of their money off those businesses. [The Washington Post8/1/10]

CBPP: According To The Treasury Department, "Only 2.5 Percent Of Small Business Owners" Would Face Higher Rates. A new report from the Center on Budget and Policy Priorities explains how GOP claims on small business taxes are wrong. CBPP showed that very few small business owners pay the highest tax rates and that the definition of "small business" being used by the right "relies on a highly exaggerated definition of small business owner." From the CBPP:

Allowing the top two marginal tax rates to return to pre-2001 levels as scheduled next year would affect very few small businesses, a recent Treasury Department study found. The study shows that only 2.5 percent of small business owners face the top two rates. 

The claims that allowing the Bush tax cuts for high-income people to expire would seriously harm small businesses rest on an exceedingly broad, and misleading, definition of "small business." The definition is so broad, in fact, that under it, both President Obama and Governor Romney would count as small business owners -- as would 237 of the nation's 400 wealthiest people. [CBPP, 7/19/12]

Posted In
Economy, Taxes
Fox News Channel
Megyn Kelly, Marc Thiessen
America Live
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