CBS' Smith advanced falsehood that Dems are taxing small businesses to fund health bill

››› ››› HANNAH DREIER

CBS News' Harry Smith misrepresented the House Democrats' health care reform proposal, saying that one idea to fund the bill will result in "putting a very tough tax on small business owners." In fact, businesses with annual payrolls of less than $250,000 would not face a penalty for failing to providing health insurance.

During the July 19 edition of CBS' Face the Nation, guest host Harry Smith misrepresented the health care reform bill introduced by House Democrats, saying that one idea to fund the bill will result in "putting a very tough tax on small business owners." Smith then asked Sen. Orrin Hatch (R-UT) whether that, coupled with "taxing the rich," will "fly with the Republicans." Hatch responded, in part, "You know, tax the rich -- well, if you tax the rich, that means that you're going to push small business into 45.7 percent top tax rate, which is like 10 percent more than corporations pay; and it's gonna kill a lot of jobs." Smith did not challenge Hatch's claim that small businesses will be pushed into a higher top tax rate as a result of the bill.

In fact, as Rep. Charles Rangel (D-NY) explained later in the segment, "It's just wrong to say that this is a tax on small businesses. We exempt small businesses from a lot of the penalties. We give tax credits, so that they're able to hire and get people health care in small businesses. This is a tax on less than 1 percent of the wealthiest people in the United States of America, and so, to say that this is a penalty on small businesses just isn't so."

Smith followed other media figures in suggesting that the House bill -- America's Affordable Health Choices Act of 2009 -- levies taxes on all small businesses. In fact, companies with annual payrolls of less than $250,000 would pay no penalty for failing to provide health insurance for employees, and only a small percentage of small businesses owners would be affected by the proposal to levy a surcharge on high-earning individuals.

As Media Matters for America has noted, the House Democrats' bill would establish a 2 percent payroll penalty for employers with combined payroll between $250,000 to $300,000 that don't offer health insurance to employees; a 4 percent penalty for employers with $300,000 to $350,000 in payroll; a 6 percent penalty for employers with $350,000 to $400,000 in payroll; and an 8 percent penalty for companies with annual payrolls exceeding $400,000. Under the House bill, small businesses with combined annual payrolls of less than $250,000 would not face a penalty for failing to providing health insurance; only businesses with payroll exceeding $400,000 annually would pay that penalty. Additionally, the bill establishes tax credits for small business employers that do provide health care.

Additionally, the legislation would establish a 1 percent tax on taxpayers filing joint returns if income exceeds $350,000 but not $500,000 per year; a 1.5 percent tax if income exceeds $500,000 but not $1 million per year; and a 5.4 percent tax if income exceeds $1 million per year, with single filers subject to the surtax starting at $280,000 per year. In a July 15 Huffington Post piece, Rep. George Miller (D-CA) stated that, according to the Joint Committee on Taxation, this would affect "only 4.1 percent of all small business owners":

Before you adopt their rhetoric, remember that nearly half of the cost of the House Democrats' health plan would be paid by tight cost controls and forcing down the expense of the health care system. That's a top priority. And as for who will pay higher taxes and who won't under our plan, here are the cold facts.

Only the highest earning 1.2 percent of American households will pay a surcharge for health care reform. That leaves 98.8 percent of American households who will not pay any surcharge at all.

As for small businesses, according to the non-partisan Joint Committee on Taxation, only 4.1 percent of all small business owners will be affected by the health care surcharge. The remaining 95.9 percent of small business owners will be completely unaffected by the surcharge.

Under our bill, a family making up to $350,000 in adjusted gross income (AGI) will not owe any surcharge at all, as President Obama has promised. A family making $500,000 in AGI will contribute $1,500 to help reduce costs and provide access to affordable health care for all Americans -- 0.3 percent of their annual income. And a family making $1 million in AGI will contribute $9,000, or 0.9 percent of their annual income.

Who are the highest earning 1.2 percent of all households? They are the same households who over the past 20 years have seen a massive shift in wealth in their favor and who over the last 8 years received the lion's share of President Bush's tax cuts.

From the July 19 edition of CBS' Face the Nation:

RANGEL: At the end of the day, we will be getting together, and we will have national health insurance. We have to have it for our country.

SMITH: Senator, let me ask you this: A couple of the ideas -- taxing the rich, the other one is especially putting a very tough tax on small business owners -- are either of those going to fly with the Republicans?

HATCH: Well, we're talking about more government, more taxes, more spending. You know, tax the rich -- well, if you tax the rich, that means that you're going to push small business into 45.7 percent top tax rate, which is like 10 percent more than corporations pay; and it's gonna kill a lot of jobs, a lot of opportunities.

I don't follow why we've got to spend another $1.5 to 2 trillion, most people estimate, on top of the $2.5 trillion we're already spending in this country, and yet, still have, under one estimate, of at least 33 million people without health insurance. I mean, these are things that are real serious problems. And I think if Charlie and I can sit down together, we'd get it done. He's -- I have a lot of confidence in his ability, and we're good friends.

But it's become so political. The House bill's total -- total partisan bill; the HELP committee in the Senate, the Senate bill is total partisan bill. And our only hope maybe is to have Senator [Max] Baucus [D-MT] be able to put something together in the Finance Committee in the Senate.

SMITH: The president really wants these bills before the recess so they can be dealt with after the recess. Is this all going too fast?

[...]

RANGEL: It's just wrong to say that this is a tax on small businesses. We exempt small businesses from a lot of the penalties. We give tax credits, so that they're able to hire and get people health care in small businesses. This is a tax on less than 1 percent of the wealthiest people in the United States of America, and so, to say that this is a penalty on small businesses just isn't so.

Posted In
Economy, Health Care, Health Care Reform
Network/Outlet
CBS
Person
Harry Smith
Show/Publication
Face the Nation
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