This year, we’re likely to hear Bush repeat the words “September 11” ad nauseum, but the phrase “small businesses” will probably be a close second.
Last night, in his incredibly deceptive speech to the National Governors’ Association, Bush spoke repeatedly about his support for small businesses, using the phrase a half-dozen times. A week earlier, at an event in Tampa, Bush used the phrase 31 times.
Unfortunately, nearly everything he’s said about his administration’s support for small businesses is false. Bush said last night:
The tax relief we passed…also helps small businesses. Remember, most small businesses in your states are sole proprietorships or subchapter S corporations. That’s a fact. And when you cut income taxes, all taxes — not a few, but all — you’re providing additional capital for subchapter S and sole proprietorships.
True? Not really. As the Center for American Progress explained:
According to nonpartisan analyses of IRS and Treasury Department data, just 3.7% of small business owners are subject to the top tax rate cuts that make up the bulk of the President’s tax cuts – meaning 96% of small businesses receive little to nothing from his first tax cut. All told, small business owners “would be far more likely to receive no tax reduction whatsoever from the Administration’s tax package than to benefit” in any way. In terms of the 2003 tax cut, “52% of people with small business returns would get $500 or less” and the bill included provisions that actually hurt small business.
Thankfully, others are starting to notice. The Washington Post’s Jonathan Weisman explained today that Bush’s “contention that upper-income tax cuts primarily benefit entrepreneurs conflicts with some of the government’s own data.”
Internal Revenue Service statistics cited by a Democratic senator this month show that the vast majority of small businesses do not earn nearly enough money to fall into the highest income tax bracket. According to IRS data from the 2001 tax year, 3.8 percent of the 18.2 million business tax returns filed that year reported taxable income of $200,000 or more. The top tax bracket last year kicked in at $311,950 of taxable income.
In contrast, 62 percent of business filers reported incomes of less than $50,000, putting them at most in the 15 percent tax bracket, the second lowest. Nearly 88 percent of business filers reported income of less than $100,000, keeping them comfortably below the top two tax brackets of 33 percent and 35 percent, which Kerry and Edwards propose to raise.
Apparently, the Bush administration isn’t anxious to talk about this in any detail. Treasury Secretary John Snow appeared before the Senate Finance Committee earlier this month and Sen. Blanche Lincoln (D-Ark.) asked Snow to reconcile the administration’s claims with the fact that less than 4 percent of small businesses have enough revenue to benefit from Bush’s tax cuts. Snow replied:
“You are asking me to comment on it, and I would like to think about it before I comment on it. The statistics we have — I am trying to figure out how to reconcile them with the statistics you have.”
Oddly enough, Snow hasn’t followed up with the Committee with an explanation. I guess he’s still “trying to figure it out.”