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Nov 20th, 2010

Small businesses that have “$250,000 in gross sales for the business. They’re the ones that are looking at massive tax increases.”
Michele Bachmann on Tuesday, November 16th, 2010 in an interview on “Good Morning America.”
November 17, 2010

Michele Bachmann Says $250,000 in Gross Sales Means a Tax Increase

Rep. Michele Bachmann discusses taxes on “Good Morning America.”

Tax rates will go up in 2011 unless Congress acts to extend the current rates. Members are talking about voting on the matter before the end of the year.

The sticking point is exactly what a final tax package will look like. President Barack Obama campaigned on making permanent the current rates for the middle class, but raising rates for couples who make more than $250,000 and individuals who make more than $200,000. Most Republicans (and some Democrats) would like to see all the current rates made permanent.

Now various compromise ideas are being floated, with ideas for extending some rates temporarily or attempting reforms of the tax code.

Tea party favorite Rep. Michele Bachmann, R-Minn., told George Stephanopoulos on Good Morning America that she was willing to accept a compromise as long as all the current tax rates stayed the same for taxpayers of all incomes.

But, she said, she opposed a compromise that would be attached to extending unemployment benefits.

Stephanopoulos then asked why it was okay for the wealthy to get their tax cuts extended, but not okay to extend unemployment benefits for the jobless.

“Well, remember again what this is. It’s a massive tax increase, and it’s on the people who are the job creators,” Bachmann said. “And people want to think that these are millionaires, sitting in leather chairs, lighting their cigars with $100 bills. That’s not what we’re talking about. These are people who, who are carpet layers who maybe employ two or three other guys, or a plumber, maybe himself and his brother, and it’s $250,000 in gross sales for their business. They’re the ones that are looking at massive tax increases.”

That’s probably a compelling narrative for Bachmann — big government taxes the little guys. We first fact-checked similar claims during the 2008 election, when Samuel Joseph Wurzelbacher, aka Joe the Plumber, worried he’d get a tax increase under Obama’s plan if he bought a company that took in around $250,000 a year.

It wasn’t true then, and it isn’t true now. Here’s why: Plumbers — or any other small business owner — get to deduct their business expenses, so they’d have to be bringing in more than $250,000 in gross sales. The tax laws allow small business owners to deduct all kinds of business expenses: employees’ pay, supplies, a car or truck, fuel costs, advertising, association dues, utilities, shop repairs, and the list goes on. (For more details, read chapter 8 of the Tax Guide for Small Business published by the IRS.)

Bachmann said that the tax increases kick in at “$250,000 in gross sales,” which traditionally means total sales at invoice values, or everything the plumbers billed. And, she said the plumbers would be looking at “massive tax increases,” when actually the top two rates would be increasing from 33 percent to 36 percent, and from 35 percent to 39.6 percent.

Finally, of all taxpayers who declare business income, about 2 percent declare enough income to see tax increases if the rates on the top brackets expire. Most small business owners would not see a tax increase, though the most profitable small businesses would.

We’re not sure why Bachmann distorted the point about gross sales. As we said, it’s something that’s been explained several times. Good Morning America posted a note on its website after Bachmann’s appearance, noting that her statement was wrong. We asked her spokesperson for a comment but didn’t hear back.

The proposed increases have been discussed many times and for several years. Her misstatement of the facts on Good Morning America seems designed to scare small business owners into thinking they’re in line for a tax increase, even if their income is modest. For distorting the tax proposals to a ridiculous extent, we rate her statement Pants on Fire.

The Truth-O-Meter Says:

Pants on Fire!

Related link: The Bachmann File

PolitiFact.comPolitiFact is a project of the St. Petersburg Times to help you find the truth in American politics. Reporters and editors from the Times fact-check statements by members of Congress, the White House, lobbyists and interest groups and rate them on our Truth-O-Meter. Were also tracking more than 500 of Barack Obamas campaign promises and are rating their progress on our new Obameter. » More

St. Petersburg Times

Acknowledgment: Content adapted from PolitiFact, a Pulitzer Prize-winning project of the St. Petersburg Times.


Related report

Bachmann vs. PolitiFact, Round 13

By Mark Sommerhauser
The Political Quarry blog
St. Cloud Times Online
November 17, 2010

Rep. Michele Bachmann’s enthusiasm for extending the Bush tax cuts has put her at odds with fact-checkers, once again.

Bachmann, R-Stillwater, overstated the number of business owners who’d be affected by the possible expiration of the Bush tax cuts on high earners, according to PolitiFact, a leading political fact-check site.

Recall that the dispute over the Bush tax cuts is whether they should be allowed to expire on those making $250,000 or more per year; both parties agree they should be extended for taxpayers below that threshold.

Bachmann — a former tax litigation attorney — told ABC News’ George Stephanopoulos earlier this week that any business with $250,000 a year or more in gross income would face a tax hike if the high-end tax cuts expired.

But PolitiFact explains the standard is taxable income, not gross income. Business owners can deduct business-related expenses from their taxable income, so they’d need to gross considerably more than $250,000 to be affected.

ABC News has posted a correction of Bachmann’s statement next to the interview at its Web site.

It’s been a rough month for Bachmann at PolitiFact, which previously took issue with her claim that President Obama’s trip to India would cost $200 million per day.

This is the 13th time PolitiFact — a Pulitzer Prize-winning project of the St. Petersburg Times — has examined a statement by Bachmann. Go here to see the other statements the site has fact-checked.


Related reports on this site

Bachmann Caught in Lie (Again) (Sept. 15, 2010)

Michele Bachmann ‘Lies in Christ’ (Aug. 31, 2009)

Bachmann Bears False Witness (Nov. 20, 2008)


FROM THE ARCHIVES: One Year Ago — November 20, 2009

Escalating Afghanistan Violence

Image: An injured boy lies in the hospital
A boy who was injured in a bomb blast lies in hospital in Farah province on Friday, Nov. 20, 2009. (Photo credit: Reuters)

One year ago today, I reported that a suicide bomber killed 16 people and wounded at least 23 others in a busy city square in western Afghanistan, while near the capital Kabul a powerful former warlord and ally of Afghan President Hamid Karzai narrowly escaped an assassination attempt.


FROM THE ARCHIVES: Two Years Ago — November 20, 2008

Bachmann Bears False Witness

Two years ago today, on Nov. 20, 2008, I reported that U.S. Rep. Michele Bachmann, appearing on Fox News’ “Hannity & Colmes” on November 18, 2008, falsely dismissed as an “urban legend” reports that she had said on an October 17, 2008 cable show with MSNBC’s Chris Matthews that then-Sen. Barack Obama and other members of Congress “may have anti-American views” and that “the news media should do a penetrating exposé … and find out if they’re pro-America or anti-America.”

3 Responses to “Bachmann Fails Truth Test”
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