"Tax policy should be serious business carried out by serious politicians using real facts and figures. This is why we have the Library of Congress and the Congressional Budget Office, among other expert institutions," writes Paul Roderick Gregory of Forbes.
Indeed, given the current state of the U.S. economy, tax policy has become an increasingly important subject. And yet, some top-ranking politicians have been making "patently inaccurate, outrageous and bizarre" claims on tax-policy issues and they are doing it without repercussion.
Millionaire job creators are like unicorns. They’re impossible to find, and they don’t exist…Only a tiny fraction of people making more than a million dollars, probably less than 1 percent, are small business owners. And only a tiny fraction of that tiny fraction are traditional job creators…Most of these businesses are hedge fund managers or wealthy lawyers. They don’t do much hiring and they don’t need tax breaks.
His comments were based on a Dec. 9 National Public Radio report that claimed to have gone searching for the oft-touted "millionaire jobs creator." They came back with this earthshattering discovery: "NPR requested help from numerous Republican congressional offices, including House and Senate leadership. They were unable to produce a single millionaire job creator for us to interview."
However, the NPR report and Sen. Reid's subsequent claims did not sit well with Paul Roderick Gregory of Forbes. He decided to dig deeper than NPR and thoroughly scrutinized Sen. Reid "facts."
“Unlike Harry Reid’s office, I went to the IRS’s Table 1.4 ‘Sources of income, adjustments, and tax size of adjusted gross income, 2009’ to check things out,” writes Gregory .
This is what he found:
There are 236,883 tax filers with incomes of a million dollars or more. By Harry Reid’s count, only one percent, or 2,361 of them, are business owners, and a tiny fraction of them create jobs. I do not know what Harry means when he says “a tiny fraction of a tiny fraction.” If we let 5 percent represent Harry’s “tiny fraction,” we are left with 118 businesses owners who earn a million or more and create jobs. Yes, they are only slightly less rare than unicorns, if Harry is to be believed.
This leaves 236,765 million-dollar-plus tax payers, most of whom are “hedge fund managers and wealthy lawyers” who “don’t create jobs and don’t need tax breaks…”
Millionaire tax filers earn a total taxable income of $623 billion, on which they pay the highest average rate (30 percent) of any tax bracket…A 1.9 percent tax surcharge on million-dollar-earners would yield $11 billion, assuming those shifty millionaires take no evasive action to avoid the tax.
Millionaire tax filers earn $221 billion – almost a quarter of a trillion — from business and professions, partnerships, and S-corporations. This is puzzling: If Harry Reid’s figure is correct (2,361 millionaire businesses), then the average millionaire-owned business earns almost a hundred million dollars, and all, except 118 of them, do this without hiring anyone. These super heroes do their own typing, selling, drafting. public relations, building, and manufacturing. They do not need employees. Remarkable!
So what does this mean?
“Millionaire tax filers earn almost a quarter trillion dollars from their businesses. They must hire hundreds of thousands of employees to do so,” Gregory concludes.
If Gregory's facts are correct, and it is simply the case that Sen. Reid--a top-ranking U.S. politician-- is simply lobbing undisciplined and poorly researched "facts" while discussing issues critical to the fiscal health of the country, this does not bode well for the future of the U.S. economy. Unless those in charge start taking this conversation seriously, America will most likely continue its downward spiral into financial ruin.
Furthermore, such "class warfare will be the anchor of the Democrat election playbook,” Gregory predicts. Indeed, it may not be unwarranted to expect more of this type of rhetoric as we approach the 2012 election.
Update: Since the original publication of this article, an update has been made. It was mistakenly reported that Sen. Reid's comments were made on Dec. 6, before the NPR report. This is not true. His comments were based on a report that NPR produced on Dec. 9 and the Senator made his comments on Dec. 12. (h/t Ken Hansen).