Big Republican Lies About Small Businesses

Two things always happen when there is a debate about whether Congress and the president should extend the George W. Bush tax cuts: 1) Republicans drag out the tired and misleading argument that any effort to return the tax rate to the pre-2001 levels amounts to "a job-killing tax hike." and 2) The corporate media fails to cite evidence that the popular GOP talking point is, in fact, a lie.

President Obama has reignited the debate by proposing yet again that we return to the pre-Bush tax rates. Individuals earning up to $200,000 and couples making $250,000 would be exempt from returning to the higher rate. If implemented, only the top 2 percent of taxpayers would see a tax increase.

But Republicans are opposing Obama's proposal because they are doing what they always do best – protect the wealthy. But instead of acknowledging the truth, they prefer to use the disguise that they acting on behalf of small business owners, although we know their main interest is protecting big business.

There's a reason the GOP takes this approach. As the Los Angeles Times reported, "Polls also show that Republicans do better when they frame upper-income tax increases as a threat to small businesses, a group that voters tend to like."

There is nothing wrong with reporters quoting Republican talking points. But there is something wrong with the corporate media, in an effort to appear fair and balanced, giving equal weight to dueling claims when one is demonstrably false.

Fairness & Accuracy in Reporting, the media watchdog group, stated: "The corporate media's bias toward giving credence to official claims from both political parties means you have to treat that question of facts as a matter of opinion – which, of course, is a problem, if you think that separating fact from misinformation is a key part of a journalist's job."

FAIR added, "And the failure to challenge Republican distortions gives them no reason to stop making them…This is especially true when media don't tell the public that the claim is almost entirely bogus."

Among the examples cited by FAIR:

USA Today (7/10/12) – Headline: "Obama Seeks to Extend Tax Cuts to Middle Class; GOP Critics Say Plan Will Hurt Small Business."

Washington Post (7/10/12) – Reported that Republicans "charged that the president's plan would raise taxes on small-business owners." It also said, "Obama said his plan would cover 98 percent of the working public and 97 percent of small-business owners."

Los Angeles Times (7/11/12) – Said Obama's plan "would extend George W. Bush-era tax cuts for those making up to $250,000 a year but not for upper-income Americans." As FAIR noted, "That is incorrect; wealthy Americans will also receive a tax cut on income they earn up to the $250,000 level."

As Media Matters, another media watchdog group, pointed out, Fox News makes a habit of letting hosts and guests impart inaccurate information about the plan to let the Bush tax cuts expire on the richest 2 percent of Americans.

For example, Alex Cortes of the Restore the Dream Foundation said on Fox and Friends when the issue was being debated in 2010 that returning to the pre-Bush levels "aren't just tax cuts for the so-called wealthy. It'll hit 50 percent of all small business income."

According to the Congressional Budget Office, the two large tax cuts under George W. Bush resulted in a loss of $1.5 trillion in federal revenue.  Obama agreed to a deal with Republicans to extend them until the end of this year, which will bring the total to $2.8 trillion. Now, he's proposing another, more limited extension.  If the Bush tax rates are allowed to expire, the top two income brackets will rise from the current levels of 33 percent and 35 percent to 36 and 39.6 percent.

The Tax Policy Center, a joint project between the Urban Institute and the Brookings Institution, stated, "Most small businesses report their income on individual tax returns, either on Section C (for self-employment or sole proprietorships), Schedule E (for S corporations) or schedule F (for farms. We don't know how many of these businesses are really small."

Approximately 36 million taxpayers report business income on their 1040s, the Tax Policy Center found. And not all of them own small businesses – some receive income from side jobs or from rental property. "Only about 900,000, or 2.5 percent, would pay higher rates if the Bush tax cuts were allowed to expire for those in the top brackets," the center found.

In addition to citing that study, Media Matters said, "And according to PolitiFact, the Joint Committee on Taxation (JCT) has projected that in 2011, 'Only 3 percent of all taxpayers who reported having positive business income will see their taxes go up under the proposed Democratic initiative'  of letting the Bush tax cuts for the wealthy expire."

In its report on the small business smokescreen, FAIR summed it up correctly in its headline: "Small Business Baloney."

George E. Curry, former editor-in-chief of Emerge magazine, is editor-in-chief of the National Newspaper Publishers Association News Service (NNPA) and editorial director of Heart & Soul magazine