Deadline: Bad Arguments That Won't Die

by Jonathan Cohn | November 29, 2011

[with contributions from Matt O'Brien and Darius Tahir]

Whenever Democrats propose raising taxes on the very wealthy, Republicans (and, yes, sometimes some Democrats) attack the idea as a job-killer. And one of their favorite ploys is to suggest the tax will impose a crushing burden on millions of small business owners. The proof, they say, is in the numbers: A tax on incomes over $1 million would hit between 30 and 40 percent of all business income that gets reported on individual tax returns. 

As Suzy Khimm writes at the Washington Post, that figure is correct -- and grossly misleading, because that 30 to 40 percent comes from a tiny sliver of the very wealthiest small business proprietors. How tiny? Just 1 percent, according to figures from the Treasury Department and the Urban-Brookings Tax Policy Center that Suzy cites. 

But wait -- the Republican argument is even more misleading than it seems. The purpose of this particular millionaire tax is to offset the cost of extending the payroll tax break set to expire at the end of this year. That tax break doesn't simply help employees. It helps employers too. Chuck Marr of the Center on Budget and Policy Priorities explains:

The bill’s payroll tax cut would not only boost workers’ paychecks by hundreds of dollars or more in 2012 but also cut the taxes of every small business. Employers would receive a tax holiday on fully half of their 2012 Social Security taxes on the first $5 million in payroll. If employers create jobs, they would pay no Social Security taxes on the first $50 million in increased taxable payroll. [italics in original]

So will Republicans continue to oppose the payroll tax break, effectively raising taxes not only on workers but also many of their employers -- all to protect the very wealthiest Americans? I guess we're about to find out.

Programming note: I changed "Daily Deadline" to "Deadline." Why? Because I haven't been keeping it daily and, besides, it looks better in the headlines. 

Elsewhere:

Are Americans learning to love taxes? No. But they may be less hostile to them than before. Catherine Rampell of the New York Times has the story. 

Speaking of bad arguments that won't die... Igor Volsky reminds Rick Perry, and everybody else, that access to emergency rooms isn't the same as universal health insurance. More on this from Austin Frakt and Aaron Carroll.

Today in Europessimism, I: Karl Smith declares the euro crisis much worse than it looks. 

Today in Europessimism, II: Tim Duy is worried about that the European Central Bank is losing control.

The buddy system: Felix Salmon attacks Hank Paulson over the revelations that Paulson tipped off his old banking buddies about market-moving news continuously throughout his reign of error, asking, “What on earth did Hank Paulson think his job was in the summer of 2008?”

Is WiFi killing sperm? I know, it sounds crazy. But a new study suggests it's a possibility. Asawin Suebsaeng of Mother Jones explains.

Reader comments of the day: My item about airline fees for checked luggage sparked an interesting back-and-forth between "Jeff Frey" and some other regular readers. It's worth checking out.

Video of the Day: Newt Gingrich is a serious candidate for the presidency. That makes me think of the 1990s. And that makes me think of Pearl Jam.

Pearl Jam - Even Flow (Official Music Video). Watch more top selected videos about: Pearl Jam

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Source URL: http://www.newrepublic.com//blog/jonathan-cohn/97941/daily-deadline-taxing-argument