Tuesday, July 10, 2012

Under Obama’s Tax Plan “just 3.5 percent of small business tax filers would pay a higher rate”


I want you to read this quote from Mitt Romney:
“What the President is proposing is therefore a massive tax increase on job creators and on small business.  Small businesses are overwhelmingly being taxed not at a corporate rate, but at the individual tax rate. So successful small businesses will see their taxes go up dramatically and that will kill jobs.”
And I want you to square that with REALITY.  President Obama’s tax plan will raise taxes on 3.5% of small business tax filers.  Now … you may ask yourself … if only 3.5% of small businesses were impacted by the plan – why would Republicans be so up in arms about it?  It’s because of LARGE CORPORATIONS and billionaires that want to avoid being taxed what is already a small rate relative to the average American.
Most people do not understand that the average worker pays 50% more in taxes than someone making $200 million a year.  Don’t believe me – read THIS.
 Republicans have perfected this little bait and switch approach for YEARS.  They tout their commitment to “protecting small business” and then what they actually do … is pass large tax cuts for corporations and really rich people.  THAT is the deal.  After all – it’s those corporations and billionaires that are helping fund those 3rd party attack ads … it’s those corporations who are donating hundreds of millions to defeat political opponents.
In other words – what Mitt Romney and the rest of the Republican party is parroting a lie to protect their wealthy donors.
Jared Bernstein – chief Economist at the Center on Budget and Policy Priorities writes HERE:
“The upper-income cuts return $850 billion over 10 years to the Treasury, simply by reverting to the top rates under Clinton, when the wealthy fared perfectly well, the budget balanced, and growth was much stronger and more broadly shared than in the Bush years.  The fact that these upper-income increases hit only the top 2% — and that’s considering both households and small businesses — is also important.  They won’t hurt the wobbly recovery, as these folks are not income constrained in the first place.”
As Talking Points Memo writes HERE:
In its latest estimate last month, Congress’s nonpartisan Joint Committee on Taxation found that in 2013, just 3.5 percent of small business tax filers would pay a higher rate — about 940,000 individuals, many of whom are lawyers and doctors in partnerships. But those few percent account for 53 percent of all small business income.
GOP aides accept those facts but they say those few small businesses are the ones overseeing growing companies whom the nation is counting on to hire. According to a variety of analyses, the lion’s share of the tax hike would be absorbed by Americans earning well over $1 million.
Late in 2010, when the same debate played out, William Gale, co-director of the nonpartisan Tax Policy Center, called it a “myth” to suggest that ending the tax cut on top marginal rates would hurt small businesses.
As we’ve shown HERE – corporate profits are at an all time high:

As the Economist wrote HERE – lobbying politicians by corporations brings an investment on return “comparable to the returns of the most blistering hedge fund.”  In other words – you scratch my back … I’ll scratch yours.  You get on your knees … I’ll give you some cash.
And you’ll often hear this laughable claim that American corporations have the 2nd highest tax rate in the world!!!  Oh my god – run for cover and vote Republican.  But what does reality look like?  The only thing that matters when it comes to taxes is the EFFECTIVE tax rate – not the marginal tax rate.  America has a MARGINAL tax rate that is 2nd highest in the world … but after corporations take advantage of deductions etc – this is how America’s ACTUAL tax rates i.e. effective tax rates stack up against other major countries (source):

American corporations do not have high tax rates – bottom line.  End of story.  I’m Done.

And over time – this is what how much corporations are paying year to year.  Notice – the burden on corporations keeps going DOWN.  Remember – every $$$ a corporation doesn’t pay because of a special loophole equals a $$$ that you have to pay or a pot hole we can’t fix or a water line that doesn’t get repaired or a free lunch that we don’t give some kid at school.  Every $$$ a corporation doesn’t have to pay in taxes is a $$$ that goes directly to a shareholder and we know that 57% of all capital gains go to the 1%. (source)

Here are a few facts you may want to familiarize yourself with:
  • Corporate tax rates are at a 10 year low (source)
  • 26 corporations had tax REFUNDS over 4 years (2008 – 2011).  Americans PAID taxes so these corporations could continue to make billions in profits.  (source)
  • The U.S. spends double on it’s military what we tax corporations (source)
One more excellent example of just how unequal the tax code is by industry.
But the basic takeaway is that there are plenty of industries that are benefiting from the current corporate tax code, and are likely to fight like hell to preserve the breaks they’re currently getting. Moreover, as Appelbaum notes, a lot of these industries are the sympathetic ones: “High-tech industries pay relatively little in taxes. Utilities and other infrastructure providers pay some of the highest rates.

Source: Ezra Klein

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