Americans For Tax Reform Continues Dishonesty On Taxes

August 04, 2010 2:23 pm ET — Walid Zafar

Last week, we highlighted a dishonest post by American for Tax Reform's Ryan Ellis (the group's tax policy director) in which he claimed that President Obama's debt commission was suggesting a tax hike of $26.7 trillion.  When a Fox News anchor asked Sen. Judd Gregg (R-NH), who Ellis claimed supported the hike, about the figure, Gregg called it "absurd."  In a post today suggesting several questions that reporters should ask Treasury Secretary Timothy Geithner, Ellis is again misleading his readers.

3. You've said that raising the top two marginal income tax rates would only affect a small portion of small businesses.  But the IRS reports that a majority of small business profits will face a tax rate hike.  Does this change your thinking?

The dishonesty here is palpable, but Ellis is not alone.  House Minority Leader John Boehner (R-OH) and the RNC have both tried their hand at this talking point.  The difference is that Ellis is supposed to be an expert on tax policy, not a professional politician.  He should know that there is a clear distinction between the total number of small businesses and total small business profit.  Conflating the two, as he does in the post, is disingenuous.

For instance, let's imagine that there are a total of ten small businesses in a given community:  Nine of them bring in between $100,000 and $250,000 while one brings in $50 million in total income.  If tax rates go back to Clinton-era levels, only one business would see its tax burden increase.  In that sense, Geithner is right. 

But because that one small business brings in significantly more than the rest combined, an increase in taxes on its profits would be an increase on the majority of total small business revenue despite the fact that 90% of businesses would not be impacted. 

It's a distinction that the Joint Committee on Taxation, which Ellis has referred to as "the official Congressional tax scorekeeper," makes quite clearly.