Observations on the world today.

Tuesday, February 24, 2004

It's magic! 

Bush Assertion on Tax Cuts Is at Odds With IRS Data

Democratic Sens. John F. Kerry (Mass.) and John Edwards (N.C.) have pledged to restore the top two income tax rates to a maximum of 39.6 percent if elected president, but Bush and Republican allies say such a move would disproportionately punish small businesses, most of which pay individual income tax rates on their profits.

"If you're worried about job growth, it seems like it makes sense to give a little fuel to those who create jobs, the small-business sector," Bush told a gathering of the nation's governors at the White House. "So I'll vigorously defend the permanency of the tax cuts, not only for the sake of the economy, but for the sake of the entrepreneurial spirit."

Internal Revenue Service statistics cited by a Democratic senator this month show that the vast majority of small businesses do not earn nearly enough money to fall into the highest income tax bracket. According to IRS data from the 2001 tax year, 3.8 percent of the 18.2 million business tax returns filed that year reported taxable income of $200,000 or more. The top tax bracket last year kicked in at $311,950 of taxable income.

In contrast, 62 percent of business filers reported incomes of less than $50,000, putting them at most in the 15 percent tax bracket, the second lowest. Nearly 88 percent of business filers reported income of less than $100,000, keeping them comfortably below the top two tax brackets of 33 percent and 35 percent, which Kerry and Edwards propose to raise.

Republicans point to a different statistic: Of the 750,000 tax filers that pay the top rate, more than two-thirds receive some (emphasis mine, Mister)small-business income from sole proprietorships, partnerships or small businesses incorporated as S corporations, according to the Treasury Department and the Republican staff of the congressional Joint Economic Committee.

Oh, 3.8% receive some income from small business, so tax cuts on some of the income of 3.8% of business people will magically create so many jobs that it justifies burdening the next three generations with a massive national debt. I get it now.

No I don't.
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