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Paul Ryan Defends His Budget’s Tax Cuts For Millionaires By Falsely Claiming It Affects ‘Mostly Small Businesses’

By Jeff Spross and Scott Keyes  

"Paul Ryan Defends His Budget’s Tax Cuts For Millionaires By Falsely Claiming It Affects ‘Mostly Small Businesses’"

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Rep. Paul Ryan (R-WI) defended the GOP’s proposed tax cuts for millionaires in response to a question from ThinkProgress today at a policy summit. The House Budget Committee chairman and author of the GOP’s 2013 budget claimed, as Republicans typically do whenever this question comes up, that, “When we think of millionaires in the tax code, we often think of Aaron Rogers or Prince Fielder or a movie star… It’s mostly small businesses.”

That in itself is a strange case to make. Whatever their profession, millionaires are by definition doing much better than the low-income Americans from whom Ryan extracts two-thirds of his spending cuts. But then Ryan dove into another defense of the $187,000 tax cut his budget would provide to millionaires:

RYAN: 65 percent of our net new jobs in America don’t come from the big corporations in America, they come from successful small businesses. Half of the people in this country work for these successful small businesses. Where I come from, it’s the business out in the industrial park outside of your town that has 50 to 250 employees. The job shops, the manufacturers. Those are the people who are struggling right now to create jobs. And their tax rate is scheduled to go up to as high as 44.8 percent in January, when most of our national competitors — China, India, England, Ireland, Canada — are lowering their tax rates on their businesses. So we’re looking at raising our tax rate on these businesses to as high as 45 percent when the international average is about 25 percent.

In short, this is not true. According to estimates in 2009 by the Urban Institute and Brookings Institute Tax Policy Center, a mere 1.9 percent of American tax filers reporting any small-business income would have been subject to the top two personal income tax brackets. Those are the only brackets which — when taxes levied by the Affordable Care Act are added in, as Ryan does above — come anywhere close to the 44.8 percent tax rate Ryan is predicting. By contrast, 34 percent of small-business filers were subject to the 10 percent tax bracket, and 14.5 percent had income so low they were able to claim the Earned Income Tax Credit.

Finally, a look into the OECD tax database reveals that three of the countries Ryan brought up as international competitors — England, Ireland and Canada — had higher marginal personal income tax rates in 2011 than the American rate Ryan fears: 50 percent, 48 percent, and 46.4 percent respectively. Hardly a portrait of an America about to spiral into international competitive oblivion.

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