Jonathan Weisman helps us on taxes and entrepreneurs

Once again, the Republicans are stretching the truth on their tax cuts. I already knew this. My mother-in-law is one of those entrepreneurs, and I know that she doesn't pull in anything close to the top income tax brackets. I've known many other entrepreneurs, and I cannot think of any that were in the top income bracket. If they had that much money laying around, they were plowing it back into their business, investing, not squandering.

This almost makes up for the article that Brad Delong chastised Mr. Weismanon. Making up for the nasty e-mail to Brad will take longer.

Bush Assertion on Tax Cuts Is at Odds With IRS Data (washingtonpost.com):

By Jonathan Weisman
Washington Post Staff Writer
Tuesday, February 24, 2004; Page A04

President Bush defended his tax cuts yesterday as economic fuel for the small-business sector in response to mounting criticism from Democratic presidential candidates that the cuts chiefly benefited the wealthiest Americans.

But the president's contention that upper-income tax cuts primarily benefit entrepreneurs conflicts with some of the government's own data.

(snip)

Internal Revenue Service statistics cited by a Democratic senator this month show that the vast majority of small businesses do not earn nearly enough money to fall into the highest income tax bracket. According to IRS data from the 2001 tax year, 3.8 percent of the 18.2 million business tax returns filed that year reported taxable income of $200,000 or more. The top tax bracket last year kicked in at $311,950 of taxable income.

In contrast, 62 percent of business filers reported incomes of less than $50,000, putting them at most in the 15 percent tax bracket, the second lowest. Nearly 88 percent of business filers reported income of less than $100,000, keeping them comfortably below the top two tax brackets of 33 percent and 35 percent, which Kerry and Edwards propose to raise.

(snip)

But under Treasury's definition, both Bush and Vice President Cheney are members of the entrepreneurial class. In his 2002 tax return, the president reported $1,549 from rental real estate, royalties, partnerships, S corporations and trusts, including income from GWB Rangers Corp., a remnant of his days as co-owner of the Texas Rangers. Of the Cheney household's $1.2 million income, $238,682 was from business ventures within the White House's definition of small business.

Economists say the broad Republican definition of "small-business man" includes not only doctors, lawyers and management consultants but also chief executives who earn $3,000 renting out their chalets in Aspen or report $10,000 in speaking fees. An aide on the Joint Economic Committee conceded that the definition includes the army of accountants and consultants at such giant partnerships as KPMG LLP and PricewaterhouseCoopers LLP, not the firms that "small business" brings to mind.