Fact-Checking Bush’s Accusations

Bush has accused Kerry of endangering the economic recovery with his proposal to raise taxes on income over $200,000. Bush’s claim is that this will raise taxes on “the 900,000 small businesses and entrepreneurs who pay at the individual rate and who are creating most of the new jobs in our changing economy.”

Breaking with media tradition in this election, the LA Times actually takes the time to determine whether this claim is true. Unsurprisingly, it is not:

[S]tatistics show that only 1 in 25 small-business owners would be affected by Kerry’s tax increases. Of those who would get hit, half have no employees other than themselves. They include lawyers, accountants, consultants and investors who fall within Bush’s generous definition of small business.

One nice detail in the piece looks at the example of Cheney’s wife:

The available data indicate that roughly half of the people defined by Bush as job creators had no employees. One is Lynne Cheney, wife of the vice president. She listed $44,580 in consulting fees on the Cheneys’ 2003 tax return, qualifying her as a small-business owner under the president’s definition. But the only person on her payroll was herself.

Cheney was unavailable for comment. Her press secretary, Maria Miller, said she had received most of the consulting income as a director of Reader’s Digest, a position she resigned from last October.

“She had no personal employees,” Miller said. “As a board member, she was providing advice and counsel. So it really wouldn’t be a small business.”

“Lynne Cheney exactly fits who the president is talking about,” said George Plesko, a business tax expert at MIT’s Sloan School of Management. “The Cheneys reported more than a million dollars in income. Mrs. Cheney is a consultant, she makes good money doing it, and she benefited disproportionately from the tax bill.

“The president’s saying this person is an entrepreneur. I’ll buy that. But she’s not creating any jobs.”

Some people may have philosophical reasons (or reasons of personal interest) to believe that raising taxes on income over $200,000 is wrong. But then be honest and admit that, rather than making up bogus macroeconomic justifications about how it will hurt the economy in a significant way. Because that is just plain nonsense.