Limbaugh falsely claimed that taxes on “most small businesses” would increase if Bush tax cuts on wealthiest Americans expire

Written by Media Matters Staff

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Rush Limbaugh falsely claimed that taxes would increase on “most small businesses” if the Bush tax cuts on Americans making more than $250,000 expire in 2011. In fact, the Tax Policy Center stated that in 2007, about 2 percent of tax returns that reported small-business income are in the top two income tax brackets, which include all filers with taxable incomes of more than $250,000.

During the February 23 edition of his nationally syndicated radio show, Rush Limbaugh falsely claimed that taxes would increase on “most small businesses” if the Bush tax cuts on Americans making more than $250,000 expire in 2011. According to Limbaugh, President Obama will announce on February 24 that “the Bush tax cuts are going to be allowed to perspire [sic] in 2011, and that will move the current top marginal rate from 35 up to 39.6, effectively 40 percent ... on incomes over $250,000 a year. This is a massive -- in the midst of a recession -- tax increase on small business.” Limbaugh later asserted that "[m]ost small businesses file on their personal income tax return. Most of them are Subchapter S corporations, and they file on their personal return. ... [T]heir new rate, will be, in a couple years, 2011 or so, will be 40 percent smack-dab in the middle of a recession." In fact, as Media Matters for America documented, 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 of more than $250,000.

Limbaugh's comments echoed those of Sen. Mitch McConnell, (R-KY) who recently revived the debunked claim, which Sen. John McCain's (R-AZ) 2008 presidential campaign repeatedly made.

From the February 23 edition of Premiere Radio Networks' The Rush Limbaugh Show:

LIMBAUGH: Obama announced -- by the way, this big deal coming up on -- tomorrow night, he's going to announce his tax increases. And the -- folks, the wrong way to talk about this is Obama is going to raise taxes on the wealthy. That is the wrong way to talk about this, because what's going to happen is that the Bush tax cuts are going to be allowed to perspire in 2011, and that will move the current top marginal rate from 35 up to 39.6, effectively 40 percent -- and this is on incomes over $250,000 a year.

This is a massive -- in the midst of a recession -- tax increase on small business. It is not a tax on the wealthy. I mean, it is, but it's that -- it's going to hit far many more small-business people than it's going to hit the wealthy.

[...]

LIMBAUGH: So, anyway, the small-business people who hire the newly happy unemployed are going to be soaked with a 40 percent tax rate. Most small businesses file on their personal income tax return. Most of them are Subchapter S corporations, and they file on their personal return, which makes -- which makes their -- their effective rate's going to be 40 -- not their effective, but their new rate, will be, in a couple years, 2011 or so, will be 40 percent smack-dab in the middle of a recession.

This is -- this is disastrous, but don't call it a tax increase on the rich. It's not that. Small businesses of 250 grand or larger are not rich people. They're going to pay the brunt.

Zachary Pleat is an intern at Media Matters for America.