Bush/Cheney are Small Businessmen
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| Sat, 10-09-2004 - 12:56am |
A Bush-Cheney ad says Kerry would raise taxes for 900,000 "small businesses" and "hurt jobs." It's a big exaggeration.
September 23, 2004
Modified: October 1, 2004
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Summary
A Bush-Cheney '04 ad claims Kerry would raise taxes on 900,000 small businesses and "hurt jobs." But it counts every high-salaried person who has even $1 of outside business income as a "small business owner" -- a definition so broad that even Bush and Cheney have qualified while in office. In fact, hundreds of thousands of those "small businesses" have no jobs to offer.
Furthermore, by the Bush definition 32 million "small businesses" would see no tax increase. The ad doesn't mention that, of course. Nor does it mention Kerry's proposals for some tax cuts specifically targeted for small businesses.
(Update, Oct. 1: After this article was posted, the Tax Policy Center issued a new estimate that the number of small employers is 471,000 -- barely half the number the Bush ad claims.)
Analysis
A Bush ad released Sept. 17 claims that under Kerry's tax plan, "900,000 small business owners would pay higher tax rates than most multinational corporations" and that would "hurt jobs."
Bush-Cheney '04 Ad
"Common Sense vs. Higher Taxes"
Bush: I'm George W. Bush, and I approve this message.
Announcer: President Bush and our leaders in Congress have a common sense plan to grow our economy...
(Graphic: President Bush & Congressional Plan: Small Business Job Growth; New Skills Through Education; A Fairer, Simpler Tax Code)
Announcer: And create jobs so small businesses can expand and hire.
The liberals in Congress and Kerry's Plan: Raises taxes on small businesses. Nine-hundred-thousand small business owners would pay higher tax rates than most multinational corporations.
(Graphic: "Liberals in Congress & Kerry’s Plan: Raises Taxes on 900,000 Small Business Owners Small Businesses Pay More Taxes Than Big Corporations")
Announcer: Tax increases would hurt jobs, hurt small business and hurt our economy.
(Graphic: "Liberals in Congress And Kerry’s Plan: Higher Taxes Hurt Our Economy")
Actually, Kerry proposes no specific tax increase on small businesses at all, and in fact is proposing some targeted tax cuts for small businesses. What the Bush ad refers to is Kerry's proposal to raise taxes on individuals making more than $200,000 per year.
Republicans argue that taxing the affluent is, in effect, taxing many small business owners who pay taxes on their business income reported on their personal returns. And that's true enough.
But what we said last December in an article de-bunking a similar tax fable bears repeating here:
FactCheck.org (Dec. 19, 2003): By twisting statistics and over-hyping, Republicans are spoiling for themselves what would otherwise be a perfectly serviceable argument: lowering taxes on the most affluent Americans does indeed lower taxes on many small businesses, and thus creates more jobs. But not nearly as many as . . . Republicans are claiming.
It is true that what Kerry proposes would return the top rates on individuals making over $200,000 to 35% and 39.6%, compared to the nominal top rate for large corporations, which is 35%. Where the Republican argument goes off the rails is in inflating the number of "small businesses" affected by raising rates on those high-income individuals. Republicans count any individual as a "small business owner" who reports even as little as $1 of income from a sole proprietorship (reported on schedule "C" of federal income-tax returns), a partnership, or a "Subchapter S" corporation (one with fewer than 75 stockholders). In fact, the majority of those being counted as "small businesses" are really individuals who aren't primarily business owners, and a huge number have no employees.
Bush & Cheney as "Small Business Owners"
To find examples of this we need look no farther than the top of the Bush-Cheney ticket:
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President Bush himself would have qualified as a "small business owner" under the Republican definition, based on his 2001 federal income tax returns. He reported $84 of business income from his part ownership of a timber-growing enterprise. However, 99.99% of Bush's total income came from other sources that year. (Bush also qualified as a "small business owner" in 2000 based on $314 of "business income," but not in 2002 and 2003 when he reported his timber income as "royalties" on a different tax schedule.)
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Vice President Cheney and his wife Lynne qualify as "small business owners" for 2003 because 3.5% of the total income reported on their tax returns was business income from Mrs. Cheney's consulting business. She reported $44,580 in business income on Schedule C, nearly all of it from fees paid to her as a director of the Reader's Digest . But giving the Cheneys a tax cut didn't stimulate any hiring; she reported zero employees.
Other examples of those counted as "small businesses" would include doctors, lawyers, accountants and management consultants who organize their practices as partnerships, and journalists who accept occasional fees for speeches or articles.
Who Would Be Affected?
When the nonpartisan Urban-Brookings Tax Policy Center ran the Kerry plan through its computer model, it projected that in 2005 a total of 995,000 persons with "business income" (or business loss) would see a personal tax increase under Kerry's plan. That's in line with various Republican calculations that put the total at up to 1 million or more.
But here's what the Tax Policy Center also found about those "small business owners" who would see their taxes go up:
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Only 49% of them actually got most of their income from business (485,000 of them).
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The large majority have no employees aside from themselves. Of the 487,000 who reported any business income on Schedule C, only 71,000 claimed deductions for wages -- fewer than 15% .
To be sure, Kerry's plan would in effect raise taxes on considerably more than 71,000 small-business owners with employees. The Tax Policy Center could not determine how many owners whose businesses are partnerships or Subchapter S corporations both had employees and reported income high enough to be affected. Those types of businesses tend to be larger and more likely to have employees than the owners of sole proprietorships who typically report on Schedule C. Census Bureau figures from 1997 show that 28% of all partnerships had employees, and 77% of all Sub-S corporations. It is also true that at least some businesses that have no direct employees other than the owner still create jobs by hiring contractors for services.
Still, it is clear that the Bush ad's 900,000 figure greatly exceeds the number of job-creating businesses that would be affected by Kerry's proposed tax increase. And the vast majority of small businesses would not be affected at all.
(Update, Oct 1: The Tax Policy Center refined its estimates after we posted this article and came up with a figure of 471,000 small employers who would see a tax increase under Kerry's proposal, including an estimate of sub-S and partnership filers who have employees. Buy this estimate, the figure used in the Bush ad is nearly double the real number.)
Who Would Not Be Affected
Bush's own Treasury Department estimates that a total of 33 million "small businesses" benefited from the Bush tax cuts on individuals, but most of them are in lower tax brackets. So -- even accepting the 900,000 figure used in the Bush ad -- that leaves more than 32 million "small businesses" not affected by an increase in the top rates on individuals.
It should also be noted that Kerry is proposing several tax cuts specifically targeted to small businesses, including a refundable tax credit aimed at reducing the cost of health-care benefits, eliminating capital-gains taxes for "long-term investments" held for five or more years in small businesses, and a "new jobs tax credit" for small businesses that add new jobs in 2005 and 2006. What Kerry is proposing for small business can be found on his website .
Sources
Neil Bradley, " Tax and Spend Democrats ," House Republican Study Committee, 25 March 2004.
2000 Federal Income Tax Returns of George & Laura Bush , Tax History Project
2001 Federal Income Tax Returns of George & Laura Bush , Tax History Project.
2002 Federal Income Tax Returns of George & Laura Bush , Tax History Project.
2003 Federal Income Tax Returns of George & Laura Bush , Tax History Project.
2003 Federal Income Tax Returns of Richard & Lynne Cheney , Tax History Project.
2003 Public Financial Disclosure of Richard Cheney , Opensecrets.org.
2003 Public Financial Disclosure of George W. Bush , Opensecrets.org.
David Wessel, "Undoing Tax Cuts Will Have Little Impact On Small Businesses," Wall Street Journal, 1 April 2004: A2.
Urban-Brookings Tax Policy Center, "Kerry Plan vs. Current-Law, Size of Individual Income Tax Change, 2005 - - Distribution Tables by Size of Tax Cut - 2005" Table T04-0144 , 16 Sep 2004.
US Census Bureau, "Statistics about Business Size (including Small Business)from the U.S. Census Bureau," website, accessed 23 Sept 2004.
"A New Era of Opportunity for Small Business," fact sheet, Kerry-Edwards 2004, undated.
Tax Policy Center Newsletter , "Kerry Tax Plan and Small Businesses," 30 Sep 2004.
Related Articles
Puncturing a Republican Tax Fable
GOP fact-twisters claim 80% of the tax relief given to the rich goes to job-creating small businesses. Don't believe it.

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Same reasons as above. What's going on with Kerry is like what happened with Nixon in the anti-war movement. They tried SO hard to find SOMETHING on Kerry to use against him, but alas, they failed so they made up those so-called Veterans for Justice or Veterans for Truth. Whatever they were called. Now they're doing it again with the swift boats. Funny how the people who were on the same boat with Kerry are standing by him. If he was lying, don't you think ONE of them would have stepped up?? I do admit that I used to want to be a republican growing up, but the party has changed so much since then. Even my mother, who is a republican, admits that. My grandparents are republican and voting Kerry and say they have to get Bush out. I, personally, was amazed by that because my grandparents are big-time Christian folk (my grandfather is an elder at his church and a preacher).
I have done a lot of reading up until making my decision. Both of Bush and Kerry. A lot of that reading is thanks to this very board here from post's other people have made on either Bush and/or Kerry. So, after that and seeing what's going on with the world I am for Kerry. I do admit in the beginning before all the 9/11 stuff and up until recently I did like Bush. I trusted him in leading our country. In the 2000 election when he was put in office I was disappointed Gore didn't win (I wasn't old enough to vote yet), but accepted it and gave Bush a try. And now all this stuff is coming out about him that I just don't like personally. I've listed a few reasons above, so I won't waste space relisting them. On Kerry's record if you show me these sources, then okay, I'll look at them. Or anybody for that matter can show me. Are they available to us? I am new to poltics so I don't know what's all available to us on the internet.
Did I say Bush was stupid? No. He seems to not want to be wrong. He seems to not want people to correct him. Look at it everytime Kerry tries to tell him. Even Poppy Bush knew going into Iraq was wrong, but I guess he didn't ever find that out huh? If he listened to his advisors then maybe he wouldn't have been in this mess. He had his mind already made up to go into Iraq and get Saddam Hussein when people said "no, it's a bad idea" and what was Bush's aftermath plan? How is he going to get our soliders out of there? And also, what is so bad about being liberal? Just wondering. I've heard this word a lot and since this is my first election I have no idea why this word is so bad. It's like saying God's name invain or something the way people react to the word! Shouldn't I be allowed to question my government? Or should I so blindly trust everything that goes on?
I'll settle for 3, he doesn't have to fess up to everything.
America was born in pursuit of an idea - that a free people with diverse beliefs can govern themselves in peace.
Throughout our history, we have forged powerful alliances to defend, encourage, and promote that idea around the world. Through two World Wars, the Cold War, the Gulf War and Kosovo, America led instead of going it alone. We respected the world - and the world respected us.
Today, our leadership has walked away from more than a century of American leadership in the world to embrace a new - and dangerously ineffective - American disregard for the world. They bully instead of persuade. They act alone when they could assemble a team. They confuse leadership with going it alone. They fail to understand that real leadership means standing by your principles and rallying others to join you.
John Kerry and John Edwards believe in a better, stronger America - an America that is respected, not just feared. An America that listens and leads - that cherishes freedom, safeguards our people, uplifts others, forges alliances, and deserves respect. This is the America they believe in. This is the America they are fighting for. And this is the America we can be.
Today, we face three great challenges above all others - First, to win the global war against terror; Second, to stop the spread of nuclear, biological and chemical weapons; Third, to promote democracy, freedom, and opportunity around the world, starting by winning the peace in Iraq. To meet these challenges, John Kerry's national security policy will be guided by four imperatives:
Launch And Lead A New Era Of Alliances
The threat of terrorism demands alliances on a global scale - to utilize every available resource to get the terrorists before they can strike at us. As president, John Kerry will lead a coalition of the able - because no force on earth is more able than the United States and its allies.
Modernize The World's Most Powerful Military To Meet New Threats
John Kerry and John Edwards have a plan to transform the world's most powerful military to better address the modern threats of terrorism and proliferation, while ensuring that we have enough properly trained and equipped troops to meet our enduring strategic and regional missions.
Deploy All That Is In America's Arsenal
The war on terror cannot be won by military might alone. As president, John Kerry will deploy all the forces in America's arsenal - our diplomacy, our intelligence system, our economic power, and the appeal of our values and ideas - to make America more secure and prevent a new generation of terrorists from emerging.
Free America From Its Dangerous Dependence On Mideast Oil
To secure our full independence and freedom, we must free America from its dangerous dependence on Mideast oil. By tapping American ingenuity, we can achieve that goal while growing our economy and protecting our environment.
http://www.johnkerry.com/issues/national_security/compare.html
Bush plans to "work with our allies", that's almost funny.
So you believe that President Bush should have made his decisions based upon information he did not yet have? hmm... that's interesting. If you are distrustful of Bush for this, you need to be adding a heck of a lot of other people to the list, including Kerry and Edwards. You have read their comments on this entire topic, not just their recent *explanations* of why they said what they said and what they *really* meant, and geeze, 'I was up late so I didn't really mean what I was quoted as saying, oops, you mean I really said that in the early afternoon... 'truths', but what they were saying at that time. Also, you might want to read that report and not just get the sound bites from more liberal leaning sources, you might be surprised to know that there is more to the report that the sound bites you've heard. I tell you , it was an eye opener to me when our local newspaper ran an article on the vp debates, when I compared the quotes of the mosderator,Cheney and Edwards in the paper to the actual debate, it was pretty interesting to see the way they left out some of it and altered what was said. The reporter even described the interaction wrongly accusing the VP of interrupting and talking over Edwards when he didn't at all, in fact, it was Edwards that interrupted Cheney's response.
"Second: the 2000 Florida election. Speaks for itself."
Yup, it sure does. It speaks volumes to know that despite all the reports, and independent reports, that refute the rhetoric on this one this liberal lie just won't die.
Hopefully I'll have time to try to verify Kerry's comment I heard today regarding 1 million blacks being disinfranchised by Bush. Anyone know where he got that number?
I have searched this topic, wasted more paper on printing it all out than I'd like to admit.
"And third: Cheney. He lied about meeting Edwards before when he has met him at least three other times including on the Senate floor. So, if he lies about something so silly and innocent as that to make himself look truthful, can Bush and him be trusted? "
I don't know that it was such a serious lie. In my opinion (I don't have the insight into his motivations that others seem to), he was trying to make a point in a debate. Did it backfire, certainly, but a lie that would make him untrustworthy, I don't know about that. I think that that is a reach, but then again, I'm not looking to find fault at every corner with this administration either. Also, I don't see how you can fault Bush for a stupid ploy that Cheney tried. That again is a bit of a reach, but hey, if it works for you, go for it.
"What makes you trust Bush? If you don't mind me asking."
Typically, I don't automatically distrust people, they have to prove themselves to be untrustworthy to me. While it is clear that Bush had bad information, we still don't know that we have all the information (it's not in those words, but the report you brought up says that regarding the WMD's). I can't fault Bush, Cheney, Kerry, or Edwards for the forceful stances they took against Saddam a few years ago when the decision to allow the use of force was made. I can't fault other nations for having poor information. I do fault the information gathering agencies for not realizing the limits of their capabilities, for not being concerned of the inability of them to share information, the the internal red tape to pass information along in a timely manner, and those that did what they could to keep this system in place for fear of eroding civil liberties and thus limiting the agencies in charge of protecting our nations. To sum it up, I don't have reason to believe that Bush has intentionally lied and/or manipulated events in his presidency for personal gain.
"Same reasons as above. What's going on with Kerry is like what happened with Nixon in the anti-war movement. They tried SO hard to find SOMETHING on Kerry to use against him, but alas, they failed so they made up those so-called Veterans for Justice or Veterans for Truth. "
While I paid minimal attention to all the Vets for Truth ads, I paid attention enough to know that they weren't born out of this campaign. It was Kerry's bid for the highest office in this country that brought them out again. The fact that they were backed by a Republican is no surprise to me, do you think that the 537's that are opposing Bush aren't backed by Democrats? Are you as bothered by the Dan Rather fraud scandal as the Swift Boat Vets ads? At least they didn't present fraudulant documents to try to back their position. I can't address all your comments on this, but if you care to look at sources, again not only liberal sites, you'll find that there is more to the stories than what you are speaking of at this point, and that what you believe is not all fact based.
" On Kerry's record if you show me these sources, then okay, I'll look at them. Or anybody for that matter can show me. Are they available to us?"
Yes, they are. It would take some effort on your part to find them and weed out all the biased, Dem or Rep sites to find the information. You can also find it through the Senate, but I don't save too many sites so I can't help you.
"Did I say Bush was stupid? No."
You said something to the effect of 'at least Kerry uses his brain'. So tell me, what did you mean when you made this comparison? What ever you meant, wheter 'stupid' is the correct word or not, it was the same deragatory rhetoric that has been used regarding Bush since the last election cycle. Do you really want me to believe that it wasn't meant in this fashion? I know I don't come across as the most intellectual person, but I'm not that naive, dumb, clueless, insert what ever word works for you.
"He seems to not want to be wrong"
Ya think? I certainly hope he doesn't want to be wrong in his actions as President of our country. Heck, I don't want to be wrong as mom of my house, as nurse at the school, as friend to my neighbors, as someone that comments on this board. Do you want to be wrong? I doubt it.
"He seems to not want people to correct him. Look at it everytime Kerry tries to tell him. Even Poppy Bush knew going into Iraq was wrong, but I guess he didn't ever find that out huh? If he listened to his advisors then maybe he wouldn't have been in this mess. He had his mind already made up to go into Iraq and get Saddam Hussein when people said "no, it's a bad idea" and what was Bush's aftermath plan? How is he going to get our soliders out of there?"
I guess if you believe that Kerry holds all the answers, then Bush should listen to him. I don't agree, and considering we are in an election cycle, Kerry is Bush's opponent and therefore by default must find negatives about his opponent, I hardly think that Kerry is in a position to be a Presidential adviser at this point. I've already discussed the notion that a plan for a war is set out before conflict begins and never deviated from. If life were only so simple, just write a plan and follow it, and everyone else will follow it too, even your enemies, they'll just follow your plan into their failure, right.
This whole 'no plan to win the war' is nothing but rhetoric. What's Bush going to do, let the world know all that he will do so the enemy know's their part? I would think that the more likely response will be to use the knowledge of a plan in everyway possible for them to succeed and us to fail.
"And also, what is so bad about being liberal? Just wondering. I've heard this word a lot and since this is my first election I have no idea why this word is so bad. It's like saying God's name invain or something the way people react to the word! Shouldn't I be allowed to question my government? Or should I so blindly trust everything that goes on?"
What are you talking about? Oh, I forgot, this is more of the rhetortic, I've heard democratic pundits say something very similar. Liberal is no more a dirty word than conservative. It defines ones political positions, as to right or left, and even right wing conservative Christian, and as a christian and someone that holds more conservative views than liberal, I don't want that negative label on me. I'm sure there must be a complimentary one on the liberal extreme, but I don't know what it is. Should you be allowed to quesiton your government, absolutely. That is what our soldiers have given their lives for since the 1700's. But when questioning our government, we should remember to keep our blinders off, and to leave our preconcieved notions at the door. We need to remember that our election process isn't a football game where we pledge our undying loyalty no matter what the cost. We need to not feel threatened by acknowledging that the other guy isn't all evil, all bad, always wrong. We need to acknowledge that we can even agree with the other guy, and it doesn't mean that we won't be able to support our own guy. I don't blindy trust any politician, they all have learned to spin to put themselves in the best light. It gets more and more manipulative as time goes on. That's why I don't rely on sources with strong conservative agendas for political purposes. But naturally, on issues that support my personal convictions, I'm going to find myself in agreement and certainly use those sources as my base. But I do like to try to look at things from other points of view, either I will soften or change my stance, or I'll know where I need to educate myself more to support my convictions, and sometimes, I just have to agree to disagree. In the end, I will make, to the best of my ability, an informed desicion, not one based strictly upon republican or democratic ideology and demogagory.
Gee, all this and all I wanted to know was if you only got your sources from those with a liberal point of view. I do appreciate the discussion though, it's been very interesting and enlightening, and hopefully I will have learned something from it. Certainly I'll watch how I use the term "liberal", it's not a dirty word.
http://www.johnkerry.com/issues/national_security/compare.html"
Hint, Kerry's website is not the best place to get accurate information on Bush, he's trying to beat him, not re-elect him!
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