As part of the healthcare/surtax debate, a silly little theme has risen regarding who will be affected by this surtax. The Republicans say it’ll be small business, which really shouldn’t surprise anyone because they’re kinda known for lying.
Since the overwhelming majority of small business owners earn far less than $280,000, few “entrepreneurs that run these small businesses” will be affected by the tax. As the Center on Budget and Policy Priorities pointed out, “only 1.9 percent of filers with any small-business income are projected to face either of the top two income tax rates in 2009.” In fact, of people who file most of their income from their own business, “more than half have income below $30,000 and 80 percent make less than $100,000.” The few business owners who do qualify for the new tax should be able to afford it. Pat Garofalo explains that “no one likes paying higher taxes” but a household earning more than $350,000 “is not a household that is barely scraping by.”
The other lie is that the rich will leave if they suddenly have to start paying taxes more in line with their income. The talking point uses Maryland which enacted a high-income tax and has seen high income earners dwindle from their tax rolls. Of course, the Republicans say, this is because those folks are moving. However, as this article in Newsweek points out, that’s not really the case… those people simply aren’t earning as much as they did.
We are not, under any scenario, talking about taxes exceeding those that existed under Clinton. When we had a booming economy, low energy prices and government surpluses. The fact of the matter is that Republican ideology and economic thinking (the so-called supply side) is all a sham. Theoretically and empirically, the ideas of Milton Friedman as applied to tax rates rates under 45% is worthless.
In point of fact, sometimes too low a tax rate can be a disaster for a country and it’s economy. Most of us learned that over the last eight years. Rep. Polis notwithstanding.