Fact Checking the Tax-Cut Debate

John Karl takes a closer look at the debate over extending tax cuts to the rich. For more, click here: http://abcnews.go.com/Politics/econom...

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  News & Politics

[mitchellkeil1]

You miss the point that the journalist did little to clarify whether the arguement presented by the "owners" or "job creators" held any water.

I am a financial advisor and the percentage of clients who are sub-s and LLC owners who plow the "profits" back into the business and don't simply pocket the profit is very small. It is their money in their eyes -- their income. (Why do you think they choose this business form?)

[mitchellkeil1]

Belladonna has it right. This is a slap dash report with little in the way of "fact checking" Then number of small businesses which earn more than $250,000 of Adjusted Gross Income is an extremely small number. $200,000 as stated in the report is not what Obama is asking for. That is the taxable AGI for a single person. The tax increase that these owners would have to pay is nothing like $40,000 or more. To pay that in additional tax would require an income of approximately $500,000 AGI!

[brianimator]

And yes, this is a LOUSY bit of analysis from ABC. Paper thin.

[brianimator]

This presents is a false dichotomy. You hire people to make you money - not as a charity. The value of that worker has to be figured into the equation. If the worker isn't paying for themselves then YOU are a bad manager. I've been the owner of an S-corp and never had to lay anyone off because of taxes on profit. If you lay someone off because you aren't willing to live with 2.6 mill you're a greedbag. This conservative claim of mass layoffs is a tired threat not a statistical inevitability.

[Belladonna Eberhardt]

According to the SBA, of the 27 million small businesses (2009 numbers) only 6 million had employees. Of those, how many had more than one employee? I'm simply not buying that it's a loss of 1.8 million jobs. 894,000 small businesses might be effected, but to what degree? Nowhere does it say ALL of them even have employees, much less that they'll lose jobs. This piece doesn't come CLOSE to giving us that information. It's poor reporting pure and simple.

[Ron Roman]

To add to my first comment, you also cannot just look at one side of the effects and ignore the benefits that can result from the slight tax increase. The increased income tax payment does not just disappear, it would go to pay down the deficit or perhaps go to cash-strapped states who could then cut one or two few teachers or police or firefighters.

Raising the tax is fair.

[Ron Roman]

The businessman says it will cost him $120k. Since the repeal of the tax cuts for those earning over $250k means the two upper marginal tax brackets of 33% and 35% increase to 36% and 39.6%, respectively, we can estimate his income. For simplicity, let’s use the 4.6% points change of the highest marginal tax bracket. To lose $120k by having his income above $250k taxed 4.6% more, his income above $250k is $2,608,695 (that is $120,000/4.6%). Add back the $250k and his income is $2,858,000.

[Retread4]

If 894,000 small businesses (estimated and could be higher) are affected by the tax increase and that translates to, on average, an estimated 2-4 jobs per business that results in 1.8 millions jobs....at a minimum lost to the tax increase. You betcha, this is a step in the right direction IF you are the government and you are growing faster than your tax support base is (IRS).

Remember in November, we can't afford another 4 years of this Administration. Too much damage has already been done.