Biden's Tax Malarkey
During Thursday’s debate, Vice-President Joe Biden engaged – in his words – in a fit of malarkey on the tax issue. Below are the details of what he claimed and what the real truth is:
Biden: “97 percent of the small businesses in America pay less - make less than $250,000. Let me tell you who some of those other small businesses are: hedge funds that make $600 million, $800 million a year. That's – that's what they count as small businesses, because they're pass-through.”
The Obama-Biden plan to raise the top two marginal income tax rates (from 33 and 35 percent today to 36 and 39.6 percent, respectively) is a hike in America’s small business tax rate. Because small businesses pay taxes using the individual rates, a hike in these rates is a hike in the small business tax rate. According to IRS data, a majority of small business profits face taxation in the top two brackets.
Studies have shown that a majority of everyone in America who works for a small business works for one that will see its tax rate rise under the Obama-Biden plan. A recent study by Ernst and Young projects that this tax hike will kill over 700,000 small employer jobs. The study shouldn’t come as a surprise, as higher taxes on businesses often means layoffs.
Despite what Vice President Biden would have you believe, the one million small businesses burdened by this tax increase are not simply far distant financial pass-throughs – they are the Main Street businesses that Americans see every day.
Biden: “We went ahead and made sure that we cut taxes for the middle class.”
Obama and Biden have clearly broken their 2008 “firm pledge” not to sign “any form of tax increase” on families making less than $250,000. As a conservative estimate, at least seven Obamacare tax hikes fall directly on middle class families, and many more will raise costs indirectly for these families. Here is a list of the top five worst Obama-Biden taxes that hit the middle class.
Meanwhile the Romney-Ryan plan will cut taxes for lower and middle-income households. The lowest rate will drop from 10 to 8 percent. The 15 percent rate (which most middle income families face at the margin) will drop from 15 to 12 percent. Furthermore, Romney will repeal Obamacare, including the 20 new or higher taxes in that law.
Of recent note, Obama has altered his tax pledge: In a second term, he only promises not to raise income taxes on those making less than $250,000, and only for one year. After the one year has come and gone, all taxes are fair game, and at any income level. With nearly $7 trillion in projected deficits in President Obama’s budget, it’s pretty clear where this Administration is coming next for higher taxes—the middle class.
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