McConnell Repeats Debunked Lies to Promote More Tax Cuts for Multi-Millionaires

McConnell Repeats Debunked Lies to Promote More Tax Cuts for Multi-Millionaires

Senate Minority Leader Mitch McConnell is repeating lies about the Bush tax cuts for multi-millionaires. Good journalists should stop him.

After McConnell defensively dodged questions from Meet The Press host David Gregory on how he could support both deficit reduction and more tax cuts for the wealthy, The Page observed that “Gregory—for second time in a month—holds a GOP leader’s feet to the summer fire on budget cuts and taxes.”

I appreciate that at least someone is forcing conservative deficit hysterics to explain their unexplainable hypocrisy. Kudos to Gregory for that.

Nevertheless, Gregory let pass the flat-out lies McConnell used to explain away the hypocrisy. In fact, in one instance, Gregory responded to a McConnell lie by saying, “Point taken.”

They are lies McConnell has said before. They are lies that have been debunked before. They are lies that should never go unchallenged as Americans participate in this critical tax debate.

McConnell Lie #1: This is existing tax policy. When Gregory asked “how do you pay for an extension of tax cuts,” McConell responded: “what are you talking about paid for? This is existing tax policy. It’s been in place for 10 years.”

Wrong. What is existing tax policy is that the Bush tax cuts expire after 10 years.
That is why if you want to extend the tax cuts beyond the expiration date, you need to either offset the cost with other tax increases or spending cut, or allow the deficit to increase.

We know Bush tax cut supporters deep down know this. How?
Because at the time of passage, as Paul Krugman reminds us today, they chose to have the tax cuts expire after 2010 as an accounting gimmick. That way, they could count the revenue collected in 2011 towards a claim that the overall package did not increase the deficit.

In other words, they knew that when you see, they do know math. They just choose not to use it when on television.

McConnell Lie #2: “50 percent of small business income.” McConnell refuses to acknowledge that the President’s proposal is only allow the Bush tax cuts expire which affect the wealthiest of Americans. Instead he said, “What they’re talking about is raising taxes, impacting 50 percent of small business income…”

McConnell was previously called out by Wonk Room’s Pat Garofalo for peddling this lie on Bloomberg TV. Yet McConnell was undeterred.
First off, the key word is “income.”

He is not saying that 50 percent of all small businesses would get a tax increase. He’s saying 50 percent of all the small business income would be “impacted” in some sort of way. That income could easily be consolidated among a sliver of businesses.

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But the lie is more complex than that. The “50 percent” number that McConnell refers is not specific to “small” businesses. Far from it.
Politifact recently dug into the origins of this smear against the President’s proposal:

…774,000 tax filers in the top two brackets —the only ones that will see a tax increase — will have positive business income. Divide that by the roughly 36 million tax filers who report business income (positive or negative), and you get 2.1 percent. In other words, still assuming that having any amount of income from a small business means that you are actually a business owner (big assumption), only about 2.1 percent of businesses will face the prospect of higher taxes based on the Democratic proposal.

2.1 percent. Not 50 percent.

And what kind of businesses would be affected? Not mom-and-pop small businesses. Tax Policy Center’s Joseph Rosenberg explains:

The narrowest measure of small business income is that which is reported by nonfarm sole proprietors (on Schedule C of the IRS Form 1040). These would include the self-employed and many people running truly small family businesses, like the proverbial corner grocery store, but also would include some independent professionals (doctors, lawyers, independent consultants). The potential impact of raising the top two rates on these independent business owners is considerably smaller than the impact on taxpayers reporting business income from other sources. TPC estimates that fewer than 250,000 taxpayers, about 1.5% of tax units reporting positive Schedule C income, will fall within the top two income tax brackets in 2011…

…The vast majority of business income reported by taxpayers in the top two tax brackets comes from partnerships and S corporations … Not surprisingly, that income is also highly skewed within the top bracket. For example, just 17 percent of the $133 billion of partnership income in the top bracket goes to business owners reporting less than $500,000 of income, and 46 percent goes to those reporting less than $1 million. Income from S corporations is even more concentrated—64% of the $211 billion subject to the top rate is for owners with more than $1 million in income…

…What do we know about the types of businesses that are generating these large incomes? Unfortunately the answer is not as much as we would like … data suggest that the majority of affected income may not come from what we generally think of as a small business…

McConnell Lie #3: Letting tax cuts expire for the wealthy won’t raise revenue. McConnell’s final dodge to the question how he could claim to care about deficit without supporting offsets for tax cuts was to say: “What we’re talking about here is raising taxes in the middle of what most Americans think is a recession. That isn’t going to produce more revenue.”

That is the flip-side to his claim last month to TPMDC reporter Brian Beutler that the Bush tax cuts had actually produced more revenue for the federal government. Beutler properly debunked the claim on the spot, and has been further backed up Ezra Klein and Ruth Marcus of the Washington Post.

And as Bill Schneider succinctly put it in Politico today: “McConnell told Talking Points Memo, ‘There’s no evidence whatsoever that the Bush tax cuts actually diminished revenue. They increased revenue because of the vibrancy of these tax cuts in the economy.’ Actually, federal tax revenues declined by 12 percent from 2000 to 2003. “

McConnell must have gotten the message, because he did not repeat that lie yesterday. He just offered the corollary, tax increases on the wealthy don’t produce revenue. Which is also a lie.

The online print media reaction to McConnell’s earlier lie is a great example of how politicians can be held accountable.

But it doesn’t amount to much if McConnell and other politicians know they can go on TV and spout whatever cooked book numbers they like without any repercussions.

We have a serious tax debate in front of us. We can’t have it unless politicians stick to the facts and the media does its job to make sure they do.