Today, House Democrats unveiled health care legislation that proposes a surtax on wealthy individuals in order to finance a portion of the $1.5 trillion cost of health reform. The surtax rates would be 5.4 percent for couples earning more than $1 million, 1.5 percent on couples with incomes between $500,000 and $1 million, and 1 percent on incomes over $350,000.
Before the unveiling, Reps. Chris Van Hollen (D-MD) and Dave Camp (R-MI) appeared on CNBC to discuss the bill, and when asked about the surtax, Van Hollen approved while Camp did not. The CNBC anchors, however, didn’t question Camp’s incorrect statistic that half of small businesses would face the tax, while casting considerable doubt on Van Hollen’s much more accurate number of businesses that would be affected:
CAMP: This is going to be a massive tax increase, half of which will be paid by small business. We expect that as many as 2 out of 3 manufacturers could pay significantly higher taxes under this. [...]
CNBC: Rep. Camp, give some details of the alternative [Republican] proposal.
VAN HOLLEN: 98 percent of small businesses are not going to feel anything with respect to the surcharge and 99 percent of American citizens are not going to feel anything with respect to the surcharge. These are very high-income individuals who did very well under the Bush tax cuts.
CNBC: It’s difficult for viewers to just hear those numbers and assume that they’re true, so we can’t go into the details of whether it’s accurate or not.
As Igor Volsky noted yesterday, the overwhelming majority of small business owners earn far less than $350,000, and thus will not be affected by the tax. Of people who earn most of their income from their own business, only 98 percent make less than $250,000, while “more than half have income below $30,000 and 80 percent make less than $100,000.”
Republicans come up with their 50 percent number by categorizing everyone that earns any money from a business or investment as a “small business owner.” But Citizens for Tax Justice ran the numbers on the House proposal today and found that about 5 percent of actual small businesses would be affected by the surtax, and that “even for those who must pay it, the surcharge would usually not affect their ability or incentive to hire workers or expand their operations.” But CNBC’s talking heads have never let the facts get in the way of their opinions.