Another Bush lie

[soulpower]

Another Political Statistic Misrepresentation

hey, if you make $1 outside of your normal job, you are a "small business!"

Are Bush and Cheney "Small Businesses?" Their Ad Counts Them As Such

A Bush-Cheney ad says Kerry would raise taxes for 900,000 "small businesses" and "hurt jobs." It's a big exaggeration.

09.23.2004

Summary




A Bush-Cheney '04 ad claims Kerry would raise taxes on 900,000 small businesses and "hurt jobs." But it counts every high-salaried person who has even $1 of outside business income as a "small business owner" -- a definition so broad that even Bush and Cheney have qualified while in office. In fact, hundreds of thousands of those "small businesses" have no jobs to offer.

Furthermore, by the Bush definition 32 million "small businesses" would see no tax increase. The ad doesn't mention that, of course. Nor does it mention Kerry's proposals for some tax cuts specifically targeted for small businesses.



Analysis




A Bush ad released Sept. 17 claims that under Kerry's tax plan, "900,000 small business owners would pay higher tax rates than most multinational corporations" and that would "hurt jobs."

Bush-Cheney '04 Ad

"Common Sense vs. Higher Taxes"

Bush: I'm George W. Bush, and I approve this message.
Announcer: President Bush and our leaders in Congress have a common sense plan to grow our economy...

(Graphic: President Bush & Congressional Plan: Small Business Job Growth; New Skills Through Education; A Fairer, Simpler Tax Code)

Announcer: And create jobs so small businesses can expand and hire.

The liberals in Congress and Kerry's Plan: Raises taxes on small businesses. Nine-hundred-thousand small business owners would pay higher tax rates than most multinational corporations.

(Graphic: "Liberals in Congress & Kerrys Plan: Raises Taxes on 900,000 Small Business Owners Small Businesses Pay More Taxes Than Big Corporations")

Announcer: Tax increases would hurt jobs, hurt small business and hurt our economy.

(Graphic: "Liberals in Congress And Kerrys Plan: Higher Taxes Hurt Our Economy")

Actually, Kerry proposes no specific tax increase on small businesses at all, and in fact is proposing some targeted tax cuts for small businesses. What the Bush ad refers to is Kerry's proposal to raise taxes on individuals making more than $200,000 per year.

Republicans argue that taxing the affluent is, in effect, taxing many small business owners who pay taxes on their business income reported on their personal returns. And that's true enough.

But what we said last December in an article de-bunking a similar tax fable bears repeating here:

FactCheck.org (Dec. 19, 2003): By twisting statistics and over-hyping, Republicans are spoiling for themselves what would otherwise be a perfectly serviceable argument: lowering taxes on the most affluent Americans does indeed lower taxes on many small businesses, and thus creates more jobs. But not nearly as many as . . . Republicans are claiming.

It is true that what Kerry proposes would return the top rates on individuals making over $200,000 to 35% and 39.6%, and as the ad states that indeed is higher than the nominal top rate for large corporations, which is 34%.

Where the Republican argument goes off the rails is in inflating the number of "small businesses" affected by raising rates on those high-income individuals. Republicans count any individual as a "small business owner" who reports even as little as $1 of income from a sole proprietorship (reported on schedule "C" of federal income-tax returns), a partnership, or a "Subchapter S" corporation (one with fewer than 75 stockholders). In fact, the majority of those being counted as "small businesses" are really individuals who aren't primarily business owners, and a huge number have no employees.

Bush & Cheney as "Small Business Owners"

To find examples of this we need look no farther than the top of the Bush-Cheney ticket:

President Bush himself would have qualified as a "small business owner" under the Republican definition, based on his 2001 federal income tax returns. He reported $84 of business income from his part ownership of a timber-growing enterprise. However, 99.99% of Bush's total income came from other sources that year. (Bush also qualified as a "small business owner" in 2000 based on $314 of "business income," but not in 2002 and 2003 when he reported his timber income as "royalties" on a different tax schedule.)
Vice President Cheney and his wife Lynne qualify as "small business owners" for 2003 because 3.5% of the total income reported on their tax returns was business income from Mrs. Cheney's consulting business. She reported $44,580 in business income on Schedule C, nearly all of it from fees paid to her as a director of the Reader's Digest . But giving the Cheneys a tax cut didn't stimulate any hiring; she reported zero employees.
Other examples of those counted as "small businesses" would include doctors, lawyers, accountants and management consultants who organize their practices as partnerships, and journalists who accept occasional fees for speeches or articles.


Who Would Be Affected?

When the nonpartisan Urban-Brookings Tax Policy Center ran the Kerry plan through its computer model, it projected that in 2005 a total of 995,000 persons with "business income" (or business loss) would see a personal tax increase under Kerry's plan. That's in line with various Republican calculations that put the total at up to 1 million or more.

But here's what the Tax Policy Center also found about those "small business owners" who would see their taxes go up:

Only 49% of them actually got most of their income from business (485,000 of them).
The large majority have no employees aside from themselves. Of the 487,000 who reported any business income on Schedule C, only 71,000 claimed deductions for wages -- fewer than 15% .
To be sure, Kerry's plan would in effect raise taxes on considerably more than 71,000 small-business owners with employees. The Tax Policy Center could not determine how many owners whose businesses are partnerships or Subchapter S corporations both had employees and reported income high enough to be affected. Those types of businesses tend to be larger and more likely to have employees than the owners of sole proprietorships who typically report on Schedule C. Census Bureau figures from 1997 show that 28% of all partnerships had employees, and 77% of all Sub-S corporations. It is also true that at least some businesses that have no direct employees other than the owner still create jobs by hiring contractors for services.

Still, it is clear that the Bush ad's 900,000 figure greatly exceeds the number of job-creating businesses that would be affected by Kerry's proposed tax increase. And the vast majority of small businesses would not be affected at all.

Who Would Not Be Affected

Bush's own Treasury Department estimates that a total of 33 million "small businesses" benefited from the Bush tax cuts on individuals, but most of them are in lower tax brackets. So -- even accepting the 900,000 figure used in the Bush ad -- that leaves more than 32 million "small businesses" not affected by an increase in the top rates on individuals.

It should also be noted that Kerry is proposing several tax cuts specifically targeted to small businesses, including a refundable tax credit aimed at reducing the cost of health-care benefits, eliminating capital-gains taxes for "long-term investments" held for five or more years in small businesses, and a "new jobs tax credit" for small businesses that add new jobs in 2005 and 2006. What Kerry is proposing for small business can be found on his website .



Sources




Neil Bradley, " Tax and Spend Democrats ," House Republican Study Committee, 25 March 2004.

2000 Federal Income Tax Returns of George & Laura Bush , Tax History Project

2001 Federal Income Tax Returns of George & Laura Bush , Tax History Project.

2002 Federal Income Tax Returns of George & Laura Bush , Tax History Project.

2003 Federal Income Tax Returns of George & Laura Bush , Tax History Project.

2003 Federal Income Tax Returns of Richard & Lynne Cheney , Tax History Project.

2003 Public Financial Disclosure of Richard Cheney , Opensecrets.org.

2003 Public Financial Disclosure of George W. Bush , Opensecrets.org.

David Wessel, "Undoing Tax Cuts Will Have Little Impact On Small Businesses," Wall Street Journal, 1 April 2004: A2.

Urban-Brookings Tax Policy Center, "Kerry Plan vs. Current-Law, Size of Individual Income Tax Change, 2005 - - Distribution Tables by Size of Tax Cut - 2005" Table T04-0144 , 16 Sep 2004.

US Census Bureau, "Statistics about Business Size (including Small Business)from the U.S. Census Bureau," website, accessed 23 Sept 2004.

"A New Era of Opportunity for Small Business," fact sheet, Kerry-Edwards 2004, undated.


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Please visit http://www.factcheck.org/article.aspx?docid=265 to view this FactCheck article in full.

 

[Quasimoto]

Hope you are wearing flame retardant gear dude..its coming.

 

[KTCKSports]

Blah, blah, blah, blah.....

You can cry about that like you idiot liberals did in 2000 on Florida.... In the mean time, I'm enjoying 4 more years of the great President Bush!!!!!!

HAHAHAHAHAHAHAHA
K-

hey, if you make $1 outside of your normal job, you are a "small business!"

 

[soulpower]

Hope you are wearing flame retardant gear dude..its coming.

truth is the best flame retardant...besides the only thing they are going to say is "you f*ing liberal this, liberal that," and "hannity told me kerry sucks so it is the absolute truth," they have nothing new to say.

bring it

>yawn<

SP

 

[Grizzly]

Ok, I don't usually embroil myself in this shit as I think BOTH of them are retards. In fact, I think ALL politicians are retards. To go even further, I propose that at least 81.735% of government officials/employees in any capacity are retards.

The point is, would you people knock it off with the "bush is this" and the "Kerry isn't this, but he's that!" bullshit. They're both exceedingly, sickly, far beyond necessary rich. They're both politicians concerned only with getting themselves elected to another term which will allow them to further expand their wealth through "favors" and other bullshit. They both lie their fucking asses off(it's in the nature of politics). Let's not try and kid ourselves here. They're both dicks. Face it.

 

[soulpower]

I will ask you ONE question:

Have you ever had a paycheck signed by a poor person?

i know where you are leading with this.

since i don't do background checks on my bosses i have to say i don't know, however i'm certain that none of them were "poor," depending on whose definition you take.

i myself believe in a flat tax, end of corporate welfare, and reform of the welfare system (forced job retraining, end of the per child welfare bonus).

SP

 

[Stephen]

don't forget, kerry's tax increase will affect "families" making 200,000+ a year, so if you are pulling down 120k and your wife makes 80k (far from rich in much of the US) you're about to get poled with an additional ~3% marginal tax.

plus kerry thinks that putting $$ back in the hands of the middle and lower class will help this country, problem with that is either he's a moron or a liar. the middle and lower class don't produce jobs or grow the economy, the upper class does. I've got a hunch he's probably just a liar.

don't believe anything you hear until you verify it yourself though, see for yourself at www.johnkerry.com

btw, Soul, what do you think is the highest tax rate that the highest income earners should pay?

 

[soulpower]

don't forget, kerry's tax increase will affect "families" making 200,000+ a year, so if you are pulling down 120k and your wife makes 80k (far from rich in much of the US) you're about to get poled with an additional ~3% marginal tax.

plus kerry thinks that putting $$ back in the hands of the middle and lower class will help this country, problem with that is either he's a moron or a liar. the middle and lower class don't produce jobs or grow the economy, the upper class does. I've got a hunch he's probably just a liar.

don't believe anything you hear until you verify it yourself though, see for yourself at www.johnkerry.com

btw, Soul, what do you think is the highest tax rate that the highest income earners should pay?

i disagree with your assessment that $200k is a "normal" income, unless you live in West Palm Beach...

i already answered your question, no tax brackets.

i disagree it IS the middle class that makes the economy grow- by virtue of consumption rate- they spend more money. the more money they spend, the higher demand rises, companies want to meet the demand by expanding supply side: HIRING.

this is unless you are wal-mart, you'd just find more sh*t to sell from china.

SP

 

[Grizzly]

btw, Soul, what do you think is the highest tax rate that the highest income earners should pay?

There shouldn't be a variable tax structure. Set it at 10-20% across the board and then the government should have to learn how to work within a budget like the rest of us. We don't allow the companies we hold stock with to continually work at a deficit. Why the fuck should the gov't?

 

[occam]

I try to stay away from the political threads but I'll make this an exception.

Frosty-I don't think that because Kerry wants to repeal a recent tax break for the richest of our nation that it "PROVES" that he does not think rich people deserve their money. You are smarter than that and I bet made the comment in a moment of frustration given your political views........which I am not lambasting by the way. I make no claim as to having these issues worked out for myself.

"This is so lame that it doesn't even deserve reading. The premise is false so this is idiotic." -Please read the post and show me where it is incorrect. I think the point the gentleman is trying to make is how juvenile and maligned the state of political dialoge and debate has become. The article actually states that the underlying premise of the GOP assertions have merit, the problem is the GROSS exageration of the relavant statistical fodder.

Perhaps if the populace were more savy with regard to informational consumption we would be able to rebuke such insulting instanceds of overstatement, generalization, and intentional confusion of correlation and causality. Whoa is me who lives amoungst the idiocy of the constituancy. BLAH BLAH BLAH........damn I'm a wordy mother fucker sometimes.

"The problem is, many small business owners may bring in enough money to make them "rich", but they still have to pay for employees and everything, and they might only bring home 40k a year. Kerry wants to raise the taxes on people like this." -Sorry, but "paying for employees and stuff" are operating expenses and are not part of the taxable earnings of a business. You pay income taxes on your revenue less your costs.

I've not only been handed checks signed by poor business owners, some of them did not clear!!

Grizz-As usual I vibe with what your driving at except in this instance I am going to have to report you to the local Objectivist Depot and report your anti-party
remarks namely the assertion that it is possible to be "exceedingly, sickly, far beyond necessary rich"......... tsk tsk.....Ann just rolled over twice LOL.


BTW-my PC is seriously fucking with me so I apologize for all the spelling and grammer errors.

 

[Grizzly]

LOL, Occam. It's true though. I don't fault them for having money. In fact, I commend them for it, but it is, technically, "far beyond necessary". Neither of them could actually spend it in their lifetime unless, maybe, they purchased a small country or something, but even that would produce revenue greater than what they lost.

I mean, me?, I'm cool with 2-3 million a year. I don't need too much more. If I ever start pulling down 5 millions a year, I'll hook you up.

 

[occam]

The creation of money is an interesting concept, I'll spare you the lecture but A key component of one type of MONEY creation relates to the reserve requirement of the Federal Reserve Bank. It determines the proportion of deposited funds that a bank must retain or secure with the Federal Reserve, the remainder of which may be loaned out at the federal funds rate plus x amount. Hence the creation of new money.

The reason I mention any of this is to address the inherant question of regurgitated Trickle Down Economics vs "Give the middle class more money to spend there by increasing the veloCity of the economy" argument.

THE TRUTH IS THAT BOTH INSTANCES RESULT IN THE LEVERAGING OF HARD, AND THE CREATION OF NEW, CAPITAL.

BOTH IF LEFT UNCHECKED CREATE INFLATIONARY PRESSURE.

WHY DOES A PARTICULAR ARGUMENT FOR THE VALIDITY OR CAUSAL EXISTANCE OF ONE PRECLUDE THE LOGIC OF THE OTHER?

WHY DOES A POLITICAL CONCEPTION OR INTERPRETATION OF EITHER NECESITATE THE DISPARAGE' OF THE OTHER?

I'M NOT YELLING MY COMPUTER SEEMS TO HAVE DECIDED THAT THESE LAST FEW LINES ARE VERY IMPORTANT.

I NEED A NEW LAPTOP GUYS.

 

[bigcuv]

don't forget, kerry's tax increase will affect "families" making 200,000+ a year, so if you are pulling down 120k and your wife makes 80k (far from rich in much of the US) you're about to get poled with an additional ~3% marginal tax.

plus kerry thinks that putting $$ back in the hands of the middle and lower class will help this country, problem with that is either he's a moron or a liar. the middle and lower class don't produce jobs or grow the economy, the upper class does. I've got a hunch he's probably just a liar.

don't believe anything you hear until you verify it yourself though, see for yourself at www.johnkerry.com

btw, Soul, what do you think is the highest tax rate that the highest income earners should pay?

Well damn if thats normal i must be a poor mother fucker. Oh and 1 question for all of u. How many of you lost your job this year? Fuck Bush, and Fuck Big busniess, Keep our jobs American, and Bring our Boys HOme.

 

[Kayz]

All I'm gonna say is this: my family owns 2 "small" businesses and we always do better when a Republican is in office!!! And no, it is not coincidence.

 

[occam]

I disparage the other because I think the government has no place to steal money from the rich just because "they don't need it."

I DIDN'T INTEND FOR THAT TO FOCUS ON YOU FROSTY ......I MEANT AS IT PERTAINS TO GENERALIZED AMERICAN POLITICAL DIALOG.

I AGREE THAT APPLIED FISCAL RESPONSIBILITY IS OF PARAMOUNT IMPORTANCE AND WILL ADD THAT IT REQUIRES A BI-PARTISAN AWAKENING TO THE REALITY OF GLOBALIZATION AND THE APPLICATION OF COMPARATIVE ADVANTAGE.

OUTSOURCING AND THE LIKE WILL CONTINUE WITHOUT REGARD TO TAX BREAKS FOR THE RICH THOUGH. IT IS THE WAY OF THE INTERWOVEN WORLD.


SOCIAL/ECONOMIC/POLITICAL/HUMAN EVOLUTION CONTINUES WITHOUT REGARD TO OUR COMFORT OR JUDGMENT.

FOR WHAT ITS WORTH, I WANT THE LEAST AMOUNT OF TAX TAKEN FROM EVERY AMERICANS POCKET AS IS POSSIBLE TO ENSURE THE PROPER FUNCTIONING OF A GOVERNMENT THAT OUGHT GOVERN ONLY IN SO FAR AS DEMANDED BY ABSOLUTE NECESSITY.

 

[Bob Smith]

They're both exceedingly, sickly, far beyond necessary rich.

I think thats called a benefit of a capitalistic, mostly free market society.

 

[Mark Kerr]

Where the Republican argument goes off the rails is in inflating the number of "small businesses" affected by raising rates on those high-income individuals. Republicans count any individual as a "small business owner" who reports even as little as $1 of income from a sole proprietorship (reported on schedule "C" of federal income-tax returns), a partnership, or a "Subchapter S" corporation (one with fewer than 75 stockholders). In fact, the majority of those being counted as "small businesses" are really individuals who aren't primarily business owners, and a huge number have no employees.

And? Being a sole proprietorship (reported on schedule "C" of federal income-tax returns), a partnership, or a "Subchapter S" corporation (one with fewer than 75 stockholders), IS A SMALL BUSINESS, BY DEFINITION.

Of course a small business can include one person with no employees. If you knew federal income tax law, you would know that TONS of intelligent individuals incorporate themselves for tax benefits and most importantly, asset protection.

Sure it may be deceptive, but it isnt a lie. If the author of that article had been a lawyer, he would understand how those numbers came about.

In conclusion: That author doesnt know what they are talking about. Many individuals, especially those involved in real estate, incorporate their persons to protect their business and most importantly, those businesses assets.

 

[isolate1]

A politician lied ??? Shocking !!

 

[Kayz]

Anyone else wondering if Bush's plan to redo the tax system means getting rid of the IRS??

God...I fucking hope so!!!

 

[Grizzly]

I think thats called a benefit of a capitalistic, mostly free market society.

It's also the primary benefit of a dictatorship. But, neither of those are relevant. I only pointed it out to illustrate that Kerry and Bush are "in the same league". To think that Kerry is in anyway more "in touch" with the average American is insane. They're both the power elite. They're both politicians which is spelled L-I-E-I-N-G- S-C-U-M-B-A-G in swhahili.