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In the Media

article imageWatch CNN's Velshi fact-check GOP rep on misleading tax stats

CNN's Ali Velshi slammed Republican Kansas Congressman Tim Huelskamp Monday night about his claim that a tax hike on small business would hurt job creation, telling him "You're on CNN right now. I would like the information to be accurate."
Congressman Huelskamp joined Velshi and Wolf Blitzer on CNN's Starting Point on Dec. 31 to discuss his views on the fiscal cliff -- the $560 billion mix of tax hikes and deep spending cuts that were scheduled to kick in at the end of 2012 -- if some type of deal could not be made to stop it from kicking in.
At the time the interview aired, Democratic and Republican leaders in the Senate were still negotiating details of the proposal which included among other things: an increase in the tax rates for families making over $450,000.
The question Blitzer had for Huelskamp was this: "If it passes, Congressman, the Senate tonight or tomorrow morning, comes up for a vote in the House of Representatives. Are you going to vote in favor of it or against it?" he asked.
Huelskamp said he was concerned about tax increases on all Americans, in particular, small businesses. "I do believe it's going to cost American jobs," he said. "We believe that will impact maybe a million small businesses and raise their taxes."
From the CNN transcript:
After some time, Velshi chimed in:
Velshi: Ali Velshi here in New York. I want to ask you a question about the taxes you keep referring to on small businesses. I have done a lot of research on this.
You're saying that the number of businesses that would have more than $450,000 in income, cleared income after their expenses and all of those things that file as corporations would number a million? I just don't, (a), believe that number to be true.
And number two, the vast majority of those businesses are, in fact, not job creators. Right? You understand that to be the case? Most of those are sole proprietorships, there's proprietorships, there's small operations that don't actually employ anybody.
Huelskamp started to backpedal. "Well, I have seen research that when we were talking about the millionaire threshold, that that would impact 41 percent of business income. And that's a significant amount," he said.
"That's a very, very different and somewhat misleading statistic," Velshi shot back. "Forty-one percent of business income is not 41 percent of businesses. As you understand the distinction, right?"
Velshi finally said:
Velshi: Sir, you put out information to our viewers. You're on CNN right now. I would like the information to be accurate. You're saying more than a million businesses will be affected if the threshold is $450,000. You want to stick with that information or do you want to check that information?
Huelskamp: That's our best guess. We're still working on that.
Velshi: I think that's a guess. I think that's a guess, Congressman.
Huelskamp: Can I -- can I answer the question?
Velshi: Go ahead.
Huelskamp: We have numbers from Montana State University, I believe the source, that say at the million level, you impact 311,000 small businesses impacted by the tax increase. At the $250,000 level, it's over 2 million small businesses.
As the post at Crooks and Liars notes, Velshi followed up during the same hour and fact checked Huelskamp for the viewers who had just watched the interview:
Velshi: Wolf, I have been doing some research, as I promised I would do, into the conversation that we had with Congressman Tim Huelskamp quoting what he said was a study by Montana State University. We're working our way through that study. I'll tell you the facts we have right now. If everybody who earned more than $250,000 saw an increase in the top tax rate from 36 percent to 39.6 percent, that would be 3.5 percent of all small businesses.
That would be 940,000 businesses. That's, I think, the number the congressman was quoting. So at 450,000, it's nowhere near the number that the congressman was quoting. But let's be generous and say it was that.
Of that number, only a very small proportion are not hedge funds, partnerships, law firms, companies that don't employ a whole lot of other people. So the congressman's facts are just incorrect on this.
There is nowhere near a million businesses that will be affected by this tax increase on people who make above $450,000.
Factcheck.org adds: the notion that small businesses are necessarily “job creators” is a big exaggeration.“Slightly more than one-fifth of small businesses” qualify as an “employer,” the organization states.
article:340326:44::0
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