CNBC allows Gregg to forward small-business tax falsehood

On the March 26 edition of CNBC's Squawk Box, host Joe Kernen allowed Sen. Judd Gregg (R-NH) to falsely suggest that President Obama's income tax proposals would increase taxes on a large percentage of small businesses. As Media Matters for America has documented, media figures -- including CNBC host Maria Bartiromo -- have previously adopted this false Republican talking point or allowed the falsehood to go unchallenged.

Referencing a Squawk Box interview with Rep. Paul Ryan (R-WI) the day before, Kernen stated, "He [Ryan] said one thing that you guys are not going to be able to stop are the taxes on capital gains going up, taxes on dividends going up, taxes on certain small businesses." Gregg replied, in part: "[T]he president ran on the policies that he was going to increase the cap gains rate, the dividends rate, and the tax on small businesses." Moments later, Kernen didn't challenge Gregg as he referred to Obama's proposal as a "tax policy that basically is focused on raising taxes on small businesses especially." In fact, 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 by Obama's proposals to let portions of 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.

As Media Matters senior fellow Eric Boehlert noted, when Ryan appeared on Squawk Box a day earlier to discuss Obama's budget proposal, he stated: "We're going to go in a completely different direction, and show the American people how we would do things much, much differently to restore growth and confidence to our economy, keep the American economy growing, and not switch over to a Europeanized type of economy." Guest host Fred Malek, founder of Thayer Capital Partners, replied, "Paul, that gives me a lot of confidence, what you said. I think you're absolutely going in the right direction."

From the March 26 edition of CNBC's Squawk Box:

KERNEN: Senator, we had Paul Ryan on yesterday, and I tried to get -- figure out exactly some of these same questions. You know, where the compromises will come, what it will finally look like.

He said one thing that you guys are not going to be able to stop are the taxes on capital gains going up, taxes on dividends going up, taxes on certain small businesses. Have you written that off? That's -- you're just preparing for that type of future at this point?

GREGG: Well, they can do all that with 51 votes, and they've got 58 votes in the Senate, and clearly that's an agenda item for them. So yes, I think Paul is probably right. It's going to be very hard to change that decision.

I mean, the president ran on the policies that he was going to increase the cap gains rate, the dividends rate, and the tax on small businesses. And he doesn't have to do anything for that to occur. In other words, you actually have to take formal action to avoid that, and they only need 51 votes to stop that.

KERNEN: Well, the combination of that with all the additional spending, a lot of business -- business groups would think that's probably not such a great idea when you're trying to get out of a recession, no?

GREGG: Well, it's a stake through the heart of the entrepreneurs of this country, basically. I mean, as a practical matter, if you're having to spend your discretionary money on paying taxes rather than on hiring people and taking risk, you slow the economy. And that's what we think will happen with a tax policy that basically is focused on raising taxes on small businesses especially -- where most of the jobs are created, by the way.

KERNEN: You like this toxic asset plan, Senator?