Politico, AP forward GOP small business falsehood

››› ››› ANDREW WALZER

The Politico and the AP forwarded the false Republican talking point that President Obama's proposals to let the Bush tax cuts for wealthy taxpayers expire and reduce the tax rate at which wealthy taxpayers could take itemized deductions would increase taxes on a large percentage of small businesses. In fact, according to the Tax Policy Center, just 2 percent of tax returns that reported small business income in 2007 are in the top two income tax brackets, which include all filers with taxable incomes that would be affected.

In March 15 articles, the Politico and the Associated Press forwarded the false Republican talking point that President Obama's proposals to let the Bush tax cuts for wealthy taxpayers expire and reduce the tax rate at which families making more than $250,000 could take itemized deductions to 28 percent would increase taxes on a large percentage of small businesses. Politico staff writer Carrie Budoff Brown reported, "Whenever Republican criticize [sic] Obama's tax-hike plans, the group they push front-and-center as bearing the brunt is small-business owners." She later wrote: "Republicans, in turn, say that it's Obama's tax-plan that is providing a double-whammy to these businesspeople, not just the recession but policies that would roll back the Bush tax cuts in 2011 and fall heavily on business owners who earn more than $250,000 a year." Likewise, the AP's Hope Yen reported, "Republicans say Obama's budget proposal to raise taxes, starting in 2011, on individuals earning more than $200,000 and on households earning more than $250,000 will hurt small businesses which face higher dividend taxes and limits on itemized deductions."

Neither Brown nor Yen pointed out, as Media Matters for America has repeatedly documented, that according to the Tax Policy Center's table of 2007 tax returns that reported small business income, 481,000 of those returns -- about 2 percent -- are in the top two income tax brackets, which include all filers with taxable incomes that would be affected.

From the March 15 Politico article:

President Barack Obama is looking for some sector of the economy to lead the nation out of recession, and he's putting down a $730 million dollar bet Monday on small businesses.

Obama and Treasury Secretary Timothy Geithner will announce a plan Monday to make it easier for these entrepreneurs to tap into billions of dollars in federal lending aid to fight a credit crunch that has brought business borrowing to a standstill.

The plan includes $730 million from the economic stimulus bill to cut small-business lending fees. They'll also raise the government guarantee on some Small Business Administration loans to 90 percent, which they hope is enough to get reluctant banks back in the lending business.

[...]

There's a political component too. Whenever Republican criticize Obama's tax-hike plans, the group they push front-and-center as bearing the brunt is small-business owners.

So between Obama and the Republicans, it's a tussle for the hearts and minds of everyone from the Mom-and-Pop store owner to the entrepreneurs with dozens of employees struggling through the economic recession.

But right now, they're suffering from the same credit crunch as consumers and homeowners. As credit has dried up, so has businesses' ability to seek capital, leading to layoffs, scuttled expansion plans and downsizing.

"The market for credit to small businesses is completely frozen in an already terrible credit crisis," Obama economic adviser Austan Goolsbee said on Fox News Sunday.

"This has been one of the most devastating aspects for job growth -- is that small businesses, which previous to this crisis had the funding they needed to grow jobs, have completely lost that. And so we're trying to reignite through direct intervention the small business credit market so that they can -- so that they can expand."

Republicans, in turn, say that it's Obama's tax-plan that is providing a double-whammy to these businesspeople, not just the recession but policies that would roll back the Bush tax cuts in 2011 and fall heavily on business owners who earn more than $250,000 a year.

In addition, Obama's budget proposal would limit itemized deductions for wealthier taxpayers and raise dividend taxes -- also two things that Republicans say hit small-business owners, one of the GOP's more reliable constituencies.

From the March 15 AP article:

Amid misgivings over his spending blueprint, President Barack Obama has decided to provide billions of dollars in federal lending aid aimed at struggling small business owners.

The broad package of measures to be announced Monday includes portions of the $730 million from the stimulus plan that will be used to immediately reduce small-business lending fees and increase the government guarantee on some Small Business Administration loans to 90 percent. The government also will take aggressive steps to boost bank liquidity with more than $10 billion aimed at unfreezing the secondary credit market, according to officials briefed on the plan who demanded anonymity to avoid pre-empting the president's announcement.

[...]

Obama will announce the new measures with Treasury Secretary Timothy Geithner at the White House.

They come as Republicans have sought to build on some bipartisan misgivings over Obama's ambitious spending blueprint. In particular, Republicans say Obama's budget proposal to raise taxes, starting in 2011, on individuals earning more than $200,000 and on households earning more than $250,000 will hurt small businesses which face higher dividend taxes and limits on itemized deductions.

The administration's proposals to improve worker access to health care and address climate change also could add higher health and energy costs to small businesses. The Obama administration maintains that revenue from auctioning off carbon emission allowances would offset much of the higher energy costs for many Americans."

Posted In
Economy, Taxes
Network/Outlet
Associated Press, The Politico
Person
Carrie Budoff Brown
Stories/Interests
Economic Recovery Plan
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