"Rubio Claims It’s ‘A Misnomer’ To Say He Wants To Preserve The Bush Tax Cuts For The Rich"
Republicans have been defending their desire to preserve the Bush tax cuts for the wealthy — which the Obama administration would like to see expire at the end of the year — by falsely claiming that they will affect a multitude of small businesses. Florida’s Republican Senate candidate Marco Rubio is willing to take this concocted version of reality so far as to claim that it’s actually a “misnomer” to call them tax cuts for the wealthy at all:
RUBIO: There is a misnomer, it’s not the very wealthiest Americans.
Q: Top two percent.
RUBIO: No, but listen, there’s a bunch of businesses in America that pay their taxes on the personal level.
Q: Two percent of small businesses operators…
RUBIO: No, 20 million Americans work for companies who are organized as S-corporations whose taxes will go up if the Democrat [sic] plan passes.
The anchor conducting the interview was absolutely right on both counts: allowing the top two income tax brackets to rest back to the levels at which they were under President Clinton would affect about two percent of American households and fewer than two percent of small businesses. In fact, according to the Joint Committee on Taxation, about three percent of people with any business income at all — from a business large or small — would see their taxes increase under Obama’s plan.
Rubio attempts to cloud the water by pointing to S-corporations, which are companies that typically don’t pay federal corporate income taxes, but pass their earnings on to people who then file personal income taxes. However, as Dylan Matthews noted, the vast majority of those reporting S-corporation income that would be affected by the expiration of the Bush tax cuts are super-rich:
Only 34 percent of those making between $200-500,000 report making income from partnerships or S corporation, while 60.4 percent of those between $500,000 and $1 million, 78.4 percent of those making between $2-5 million, and 89.2 percent of those making over $10 million do. Given that the vast majority of high income filers–79.4 percent– make between $200-500,000, this suggests that the filers reporting small business income who would be affected by letting the tax cuts expire come disproportionately from the ranks of the super-rich.
The average annual income of those affected by the expiration of the Bush tax cuts for the rich is $800,000. And even if these rates are bumped up, due to the lower marginal rates on the lower- and middle-class that Obama would like to keep, “taxpayers with income of more than $1 million for 2011 would still receive on average a tax cut of about $6,300 compared with what they would have paid under rates in effect until 2001.”
Plus, this whole debate is occurring at a time when fully one quarter of the total income in the country is being made by the richest one percent of households. And that is no misnomer.