Tag: Exemptions

Dems: Want Tax Cut Cover? Try the Small Business Exemption!

(Cross-posted on Kos.)

I don’t need to echo that the Democrats cannot cave on a vote for a middle class tax cut.  But the one charge that seems to scare them (even though it shouldn’t) is that raising taxes on incomes over 250K will hurt small businesses.  In fact, this fear was an important reason why there was no pre-election vote on the tax cut.  Over the summer, House Dems feared a vote against the over 250K extension “would endure Republicans’ charge that they had voted to raise taxes on some small businesses.”

That’s partly because Republicans like Rep. Neuberger (Liar, TX) make wild charges like that 94% of small businesses will face tax increases if the taxes expire.  In fact, it’s more like 3% at most.

If Dems still feel this vulnerability, why not add a small business exemption to the expiration of the over 250K cuts?

Since no more than 3% of actual small businesses would be exempt, the revenue effect would be minimal. And Democrats would have some political cover on the one issue that seems to scare them most about letting the cuts expire for over 250K.

Of course, the Republicans will continue to lie about what actually is a small business, a lie rated “Pants on Fire” by Politifact:

Neugebauer said that “94 percent of small businesses will face higher taxes under the Democrats plan.” The statement is problematic in several ways. First, it implicitly assumes that the Democratic plan is to let all of the tax cuts lapse, when, in fact, Democratic officials have consistently said that they intend to raise taxes only for the wealthiest individuals. Second, two independent studies that looked at the impact of the Democratic proposal on small businesses found that only between 2 to 3 percent of tax filers who report having what can be thought of as small business income will be affected. One of those studies came from the very source that Neugebauer incorrectly cited. Finally, reporting business income doesn’t equal owning a small business, and data from the Tax Policy Center confirm that in the top tax bracket, only about a third of the tax filers report having at least 50 percent of their income from a business. We looked and looked for a shred of truth and couldn’t find one, so we rate this Pants on Fire.

Like anything else these days, this would be a test of whether Right Wing propaganda can convince people of anything (500B in Medicare cuts, Death Panels, Obama raised middle class taxes and triled the deficit).

But at least it would make the lies a little bit harder to pull off.