small business

In fact, according to the Tax Policy Center's table of 2007 tax returns that reported small-business income, 481,000 of those returns—about 2 percent—are in the top two income tax brackets, which include all filers with taxable incomes that would be affected by Obama's proposals to let portions of the Bush tax cuts for wealthy taxpayers expire and to reduce the tax rate at which families making more than $250,000 could take itemized deductions.

Even though only two percent of people who are classified as small-business owners would see a tax increase under President Obama's policies, Media Matters reports that many media figures and outlets—including CNBC host Joe Kernen, CNBC host Maria Bartiromo, ABC News' Jake Tapper, CNN's Dana Bash, Fox News' Sean Hannity, CNN's David Gergen, Politico, the Associated Press, The Washington Post, and The New York Times—have advanced, uncritically repeated, or failed to challenge the debunked Republican falsehood that Obama's income tax proposals would increase taxes on a large percentage of small businesses. For example, Kernen didn't challenge Sen. Judd Gregg, R-N.H., on the March 26 edition of CNBC's Squawk Box after Gregg referred to Obama's proposal as a "tax policy that basically is focused on raising taxes on small businesses especially."

The number of small-business owners who would be affected by this tax increase would actually be very small, according to the Center for Budget and Policy Priorities and the Brookings Tax Policy Center.

First, less than 9 percent of people with any small business income have incomes of over $250,000. The remainder would actually get a tax cut under President Obama's tax plan. Second, only 1.9 percent of small-business owners pay taxes at above the 28 percent tax bracket. Third, many of the people who would be affected by the proposed tax increase are actually passive investors who have no direct role in managing the businesses, including multimillion-dollar hedge-fund managers. Plus, small businesses whose owners are paying taxes on their profits at the personal tax rate have other options for lowering their tax bill.

What small-business owners will get with this tax change, however, is policies that will lower their health care costs over time, help them shift to green-energy sources, strengthen schools so they can draw from a better-educated labor pool and a better transportation grid for their goods and their workers. And those changes will have a positive impact on their bottom line that will outweigh the small tax increase a few might pay.