I’ve started to read Ezra Klein more.
Q: Republicans keep fighting for the Bush tax cuts with a talking point about small business owners filing as individuals. I’ve heard 50 and 75% quoted as the number of $250k filers that are actually small businesses. Any truth to this? It seems to be their strongest case against letting the cuts expire.
A: As far as I can tell, this argument originated with Grover Norquist in this column. Norquist cites IRS data to say that two-thirds of income from sole proprietorships, partnerships and S corporations was reported by filers making over $250,000 a year.
Although true, this is almost totally irrelevant. Norquist looks at the proportion of income, not filers, which inevitably results in a bigger portion for high-earners. We want to know how many small business owners this would affect, not how much small business income.