Voter Resource Group Slams McCain Over Tax Allegations
Factcheck.org, a nonpartisan, nonprofit resource for voters that aims to reduce confusion about topics discussed in U.S. politics, parsed Republican presidential aspirant John McCain's allegation that Democratic presidential contender Barack Obama would raise tax rates for 23 million small-business owners and concluded that it is a "false and preposterously inflated figure."
Factcheck.org, a project of the Annenberg Public Policy Center at the University of Pennsylvania, said that after analyzing the charges, "we find that the overwhelming majority of those small-business owners would see no increase, because they earn too little to be affected. Obama's tax proposal would raise rates only on couples making more than $250,000 or singles earning more than $200,000."
McCain (R-Ariz.) has been making his claims for months. In early June he spoke to the National Federation of Independent Business and said of the Illinois senator: "Obama's tax increases will hurt the economy even more, and destroy jobs across this country. If you are one of the 23 million small business owners in America who files as an individual rate payer, Senator Obama is going to raise your tax rates." He reiterated the allegation in a July 7 speech, a July 8 address to the League of United Latin American Citizens, a July 9 campaign event, and in a July 12 radio address.
Factcheck.org noted that the Small Business Administration counts 26.8 million small firms across the nation, but that fewer than 6 million of those are actually employer firms with any payroll.
Michael Dobbs, who writes The Fact Checker blog for The Washington Post, in June revealed similar findings. He awarded the McCain camp "two Pinocchios" for its claims. Two Pinocchios on the Dobbs scale indicates "significant omissions and/or exaggerations. Some factual error may be involved but not necessarily. A politician can create a false, misleading impression by playing with words and using legalistic language that means little to ordinary people."
The McCain campaign told Factcheck.org that Obama's health care proposal to provide coverage for uninsured workers would amount to a "tax," either in the form of higher costs for covering employees or "cash to the government." Factcheck.org said: "McCain was talking about income tax rates, not higher business costs. That's not justifying McCain's claim; that's trying to change the subject."
The Factcheck.org entry, which was written by Director Brooks Jackson, said the vast majority of those whom McCain is counting as small-business owners have no employees and wouldn't encounter any added costs for covering workers. Obama's plan wouldn't apply to every small employer. It says: "Small employers that meet certain revenue thresholds will be exempt." Also, after the McCain campaign responded to Factcheck.org, Obama announced July 13 that he is proposing to grant $6 billion per year in tax credits for small businesses that provide health insurance plans, covering up to half the cost of premiums paid to cover employees.
However, Jackson said McCain is right to say that many small-business owners would see their taxes increase if Obama is elected and raises the top income-tax rates. Many small firms are legally organized in a way that would require them to pay taxes on their business income as individuals, rather than as a corporation. But since Obama's plan wouldn't affect couples making less than $250,000, or singles making less than $200,000, the new rules would affect only a fraction of the 23 million small business owners McCain has cited, probably less than about 660,000, according to the Urban-Brookings Tax Policy Center.
By Sharon McLoone |
July 17, 2008; 4:08 PM ET
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