WSJ baselessly claimed health care surtax would “hit small business especially hard”

The Wall Street Journal editorial board claimed that the House Democrats' health care reform bill is “a jobs killer,” citing as evidence the bill's “5.4-percentage point income surtax,” which it baselessly asserted “would hit small business especially hard.” In fact, according to House Democrats, the nonpartisan Joint Committee on Taxation (JCT) has concluded that only 4.1 percent of small businesses would be affected at all by the surtax -- which, as currently drafted, affects household income exceeding $350,000 -- while an even smaller number would presumably be affected at the surtax's 5.4 percent level, which applies only to income exceeding $1 million.

From the Journal's August 8 editorial:

This natural revival should continue if policy mistakes and uncertainty don't get in the way. On that score, the Fed will have to get off its easy-money autopilot and consider tightening earlier than it thought. A signal at its meeting next week that it won't repeat the mistakes of 2003 and 2004 would be welcome, and salutary for rising commodity prices and bond rates.

Washington could also help by stopping the most dangerous parts of the Obama agenda. The health-care bill is a jobs killer, with its 5.4-percentage point income surtax that would hit small business especially hard, and its employer mandate to provide insurance or add an eight-percentage point payroll tax on top of the usual 15%.

Surtax on wealthy would affect 4.1 percent of small businesses, according to JCT

Surtax in House bill applies only to income exceeding $350,000 per year for joint filers, with the 5.4 rate applied to income exceeding $1 million. The legislation would establish a 1 percent tax on joint income exceeding $350,000 but not greater than $500,000 per year; a 1.5 percent tax on joint income exceeding $500,000 but not greater than $1 million per year; and a 5.4 percent tax on joint income exceeding $1 million per year. Single filers would be subject to the surtax starting at income exceeding $280,000 per year.

Ways and Means committee stated that according to JCT, 4.1 percent of small-business owners would be affected. The committee stated in a summary document, “Using the broadest definition of a small business owner (i.e., any individual with as little as $1 of small business income), the nonpartisan Joint Committee on Taxation has estimated that only 4.1% of all small business owners would be affected by the health care surcharge.”

Rep. George Miller (D-CA) also stated that, according to JCT, surtax would affect “only 4.1 percent of all small business owners.” Miller stated of attacks on the proposal by “Republicans and right wing commentators”:

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.