Fox strikes again.
Appearing as a guest host on Fox & Friends yesterday Dana Perino asserted that the health care reform bill's Medicare investment tax on those making over $200,000 a year is "so disturbing … because the people who make that money are the small business owners."
I addressed this issue in September, in an online debate with Phil Kerpen
Director of Policy, American for Prosperity on PBS NOW (See www.healthbeatblog.org dated Sept. 25, 2009) At the time, reformers in the House had proposed asking households reporting joint income over $350,000 to pay an extra 1 percent on earnings over that amount, while those earning over $500,000 would pay 1.5 percent; and millionaires would pay a 5.4 percent surtax on earnings over $1 million.
Kerpen claimed that this would create a horrific burden on small businesses that are “the engine of job creation and economic growth. Most so-called ‘wealthy Americans’ are simply small business people,” he argued, “who pay their business taxes on their regular tax returns.”
In the rebuttal I pointed out that according to the non-partisan Joint Committee on Taxation only about 4.1 percent of small businesses would be affected by a tax on incomes over $350,000—and that’s only if you used “the broadest definition of a small business owner—anyone with as much as $1 of business income.”
The truth is that while quite a few Americans earning over $350,000 a year own an interest in a small business, few small businesses actually deliver $350,000 in profit. Indeed, JCT reports that 50 percent of small business owners earn less than 1/3 of their income from the business. (If you’ve ever tried to start a small business, you know just how difficult it is to make money.) Most “wealthy Americans” are not small business owners—or if they do own a small business, it is not the source of their wealth.
But you have to hand to it to the conservatives, once they get their hands on a piece of misinformation, they’re like a dog with a dirty bone in its mouth–they’re loathe to give it up. So yesterday a Fox host suggested that the tax in the reconciliation bill will impose a serious hardship on small businesses.
Under the new bill that Congress will be voting on in the next few days (perhaps as soon as Sunday) , the Medicare tax for individual earning over $200,000 and married couples earning over $250,000 expands. (Today Americans in these higher tax brackets pay a 1.45% payroll tax on wages to help fund Medicare. The Senate bill would have raised that tax to 2.35% for individuals reporting wages over $200,000 ,and couples bringing home more than $250,000. The reconciliation bill expands the 2.35% tax to include not just earned income, but investment income (dividends and capital gains, as well as “gross income from a trade or business involving passive activities” ) for those at the top of the income ladder.
On Fox yesterday, Perino suggested that small businesses would be hit hard: “The reason [this is] ‘so disturbing is because the people who make that money are the small business owners, and they're the ones who create the jobs. And so this will feel like, as I've said, a lead-blanket on economic growth and then supposedly the administration's next priority is going to be increasing jobs in the states”
T
his wasn’t true in September, and it’s not true now. As Media Matters pointed out recently : “fewer than 1.3 percent of small businesses make enough to be affected by the tax.
Despite Perino's claim that “small business owners” are “the people who make over $200,000 “and would therefore be affected by the Medicare investment tax, Media Matters reports that “according to the Tax Policy Center's table of 2009 tax returns, 457,000 of the 36,064,000 returns that reported small-business income – or just 1.3 percent of them — were in the top two income tax brackets , which include all filers with taxable incomes high enough to trigger the investment tax in the health care reform bill.”
Moreover: “As Ben Harris wrote on the Tax Policy Center's TaxVox blog, only ‘0.5 percent of small business owners both fall into the top two marginal tax rates AND derive more than half their income from a small business.’"
Looking at the 36 million taxpayers who had small business income in 2009—including those involved in sole proprietorships, S corporations and partnerships as well as taxpayers who receive royalties, rental income and income from a trust, Media Matters noted that “just 1.3 percent fall into the top two tax brackets. Estimates by the Treasury Department and Joint Commission on Taxation reach a similar conclusion.”
Here’s what I find infuriating about the Fox campaign to confuse Americans about health care reform: They show no shame. Ignoring evidence that proves Fox commentators wrong, t
Excuse me, but nothing in this bill “asks” anyone to do anything. It is a flat out mandate send down from “King Obama” himself, and if we don’t comply, fines and prison sentences will be the result. Everything about this bill is unAmerican, non-constitutional…quite simply, it’s flat out illegal! You have NO basis to make any argument FOR this bill here in the US because our constitution prohibits this kind of government intervention into people’s lives. The majority of Americans “asked” about this DO NOT want it, no matter what income they make! Whether Perino is accurate or not isn’t the issue here! Turning our capitalist society into a communistic state is the issue. Until YOU can read, and understand the constitution, you need to just keep your mouth shut, and your pen in its place.
I’d like to ask Jerry if he’s withholding his tax that goes to Medicare, not to mention social security, defense, roads, fire service etc.
Jerry’s hit B, I, N, and G on his Fox Bingo card. Still missing a fascist or Hitler reference, though.
Jerry, even the Founding Fathers that “conservatives” love to invoke, and the “public” that they represented understood the need for taxes to support the Nation’s government. The United States Tariff Act of 1789 was the second statute enacted by the US Government. Signed on July 4, it was called the “Second Declaration of Independence” by newspapers because it was intended to be the economic means to achieve the political goal of a sovereign and independent United States.
Jerry, Chris, Harry in MD, Marc
Jerry–Apparently you have never read the constitution. Or, perhaps you have and just weren’t able to understand it.
Take a look at Harry M.D.’s comment.
Chris- Thannks- made me smile out loud. (A nice antidote to the rant.)
Harry in MD- Exactly.
Marc- I’m sure Jerry wants the services, just doesn’t want to pay for them.
Harry in MD:
I agree with you that Congresss has the power to tax.
And, that taxes can be used for the general welfare.
And, that health care, possibly, could be defined as for the general welfare.
But, there is no such thing as “dedicated” taxes, for all taxes go into the Treasury’s general fund to be allocated for the “general welfare.”
What disturbs me is when Congress allows for one government agency to borrow from another government agency, as when the Treasury borrowed from the Social Security and Medicare trust funds.
You may ask “How can government borrow from itself?” Exactly. It cannot do that from an accounting standpoint. That’s why the loans are not accounted for, other than as part of the total debt.
But, this debt shows no principal or interest payments, and is considered woefully inferior to debt that government owes the public.
Because, Harry, can you really be expected to pay back a loan that you provide to yourself?
This may be constitutional, but is it fair for our descendants?
Don Levit
Jerry Spangler writes: “Everything about this bill is unAmerican, non-constitutional…quite simply, it’s flat out illegal! You have NO basis to make any argument FOR this bill here in the US because our constitution prohibits this kind of government intervention into people’s lives”
It’s beyond belief the extent to which people who consider themselves educated citizens are so utterly ignorant of both the Constitution and the Law….particularly Substantive Law. You are an example of the ignorance that is rampant anong far right ideologues.
Tom–
Yes, it is , well at lest almost “beyond believe” that people who are so certain of their knowledge know so little about the constitution, the law.
I’m afraid that this country has a long history of despising “experts”,
undervaluing education and “eggheads,” while promoting “know-nothingism ” (actually a political
party. )
I believe that if we began paying much more for public education (k-12) we would
place a much higher value on educaiton.
As a society,we tend to believe that things that are more expensive (truly ugly Coach bags, totally tasteless McMansions, etc.). are
more valuable
Maggie,
I wonder if we – our society – is capable of valuing education….real education. I’ve believed for a long time that on the whole, we’re actually anti-intellectual.
College has become a literal joke. That someone can graduate college unable to write a coherent memo or commentary; that economics, philosophy / logic are not required; that there is no requirement for being competent in critical thought, is pathetic.
Colleges have become just another business. To declare that they educate is an outright lie. They train, and often not very well.
There was a time that a “liberal” education was the only higher education. This country produced many outstanding political leaders, business leaders, and thinkers. Now, one can graduate with a college degree because one is well trained. My college education is in accounting and engineering. I too was well trained, but I had to educate myself.
My wish to see a liberal education become a requirement isn’t wishful thinking. For example, I have a son who took his degree in Philosophy, was selected to be a Navy jet pilot, and now has his own law practice. He was educated first, and trained afterwards.
I apologize for this non-healthcare post. Your comment got me going, so, in the spirit of current talk-shows, it’s all your fault, lol.
Tom–
I’m afaid it is true that these days, it is quite possible to get a degree from a supposedly excellent U.S. university withoutlearning to write or to think critically.
Though there are plenty of professors out there still teaching these skills–but students are no longer flocking to liberal arts’ courses.
And, unfortuantely, too often, academics are hired based on what they publish rather than teaching ability –or interest in teaching.
Anyone who wants to send their offspring to a university where there are requirements–rigorous requirements that force students to write, to think, and to read good writing might consider McGill in Canada.
My daughter went there and I think (hope) that the requireiments are still pretty rigorous. This is probably also true of other Canadian universities- Toronto, etc.
They’re more old-fashioned than we are, and there’s greater respect for education. In Canada, high school is 5 years–which is to say that rather than going to school k-12, Canadians go to school k-13.
That extra year makes a difference at a time when a young person’s mind is ripening. But tax-payers in the U.S. probably wouldn’t be willing to pay for another year of public education.
P.s.- My children are both teachers. My daughter teaches 1st grade in NYC public school; my son teaches English Lit at Wake Forest. They both teach people how to read!
And Wake Forest is a pretty old-fashioned place, so my son is able to teach demanding courses.
Small business owners can easily end up in the higher “income” brackets because of the payments on purchases of buildings, inventory, and equipment. The “income” never goes into the household accounts, but must be reported as income and assets, inflating taxes.
Citing MediaMatters to combat claims by Fox?
That’s like citing Rush Limbaugh to combat claims by CBS.
Dan–
Except that Media Matters and CBS generally make an effort to practice
fact-based jouranlism.
Limbaugh and Fox don’t.
LOL! Too much! Interesting.