WASHINGTON - In their effort to hold middle class tax cuts hostage to tax breaks for millionaires and billionaires, Congressional Republicans are once again hiding behind discredited claims about what expiring the high-income Bush tax cuts would do to small businesses.
“The bottom line is that Democrats believe the very highest earners should contribute to deficit reduction and Republicans do not. The Joint Committee on Taxation made the facts plain: 97 percent of taxpayers with business income don’t make enough to be impacted by ending the Bush tax breaks for high earners. And those that do average more than $700,000 in pass-through income alone," said Ways and Means Committee Ranking Member Sander Levin. “Republicans clearly don't think that the very highest earners should be asked to pay more to help with the deficit, and they'll hide behind any excuse they can find to stand with millionaires instead of the middle class."
The facts are clear:
* Net positive business income does not mean business owner and it sure doesn't mean small business owner. This is picking up law firm partners, hedge fund managers and other pass-through owners, no matter the nature of the business or how small their stake in the firm.
* Based on the letter Sen. Hatch received, the 940,000 taxpayers with business income who would be affected are just 3.5% of those with business income. They reported an average of more than $700,000 in pass-through income each (and may well have significantly more income from other sources).
House Republicans’ claims that allowing the tax cuts on income above $1 million to expire would harm small businesses have been debunked:
A Treasury Department report shows that allowing the tax cuts on income above $1 million to expire would not affect 99 percent of small businesses. [Source: Office of Tax Analysis, p. 36]
* These claims have been rated “false" by independent fact checkers. [See Politifact and Fact Checker stories]
* “Only about 8 percent of ordinary high-bracket income is generated by small business employers. The bottom line is that most income affected by the rate change has nothing to do with small business employment." -Marty Sullivan, testimony before the Ways & Means Committee, citing Office of Tax Analysis.
