Wednesday, September 28, 2011

Obama Believes He Gave Tax Cuts to Small Business

I am so glad that someone actually fact checked the president. Obama has been touting the claim that he gave tax cuts to small business for the past couple years. I was afraid that the constant lies would be construed as fact. American should not believe anything Obama says, especially with his trusty TelePrompter. The Titanic is sinking, and Obama believes he can save the sinking ship.

(Washington Post) “As I said, we’ve actually cut taxes for small business 16 times since I’ve been in office. So taxes for small businesses are lower now than they were when I came into office.”

--President Obama, Town Hall with LinkedIn, Sept. 26, 2011

We’ve been meaning to look into the administration’s claim that the president has cut small business taxes “16 times,” and now the president’s appearance in Silicon Valley has given us an opportunity. (The White House also has claimed as many as 17 small business tax cuts, including a tax cut in a bill signed at the end of 2010.)

The president, in fact, went even further this week and asserted: “Taxes for small businesses are lower now than they were when I came into office.” That’s a big claim. How true is this?

The Facts

The White House first began to cite “16 tax cuts” last year, as the president prepared to sign a small business bill. The fact sheet distributed by the White House stated that bills signed by the president in 2009 and 2010 (primarily the stimulus bill) had yielded “eight separate small business tax cuts,” and that the new bill would add another eight.

The list also appears to be inflated. The first group of eight tax cuts includes bonus depreciation; the second group of tax cuts extends this provision. There is also an expansion on the limits of small-business expensing in the first list; the second set of tax cuts includes this provision. To us, these seem to be more or less the same tax cut, though others may disagree.

Moreover, these tax cuts are often quite limited in impact. Not only do many require the small business executive to do something to get the tax cuts—as opposed to a real cut in tax rates--but they have sometimes narrowly drawn criteria.

The National Federation of Independent Business estimates that fewer than 250,000 businesses would qualify for the full health-care tax credit—out of an estimated 27 million small businesses--while another 1.2 million would qualify for a partial credit.

Finally, we have to look at the other side of the equation. The new health-care law includes taxes, especially an increase in Medicare payroll taxes, which in 2013 would begin to affect more affluent small business owners making net income of more than $200,000 (single) or $250,000 (couple). That amounts to about three percent of all small businesses.