Senate Majority leader Harry Reid (D–NV) drifted off to fairy-tale world this week and dreamed up some statistics as he did. On the floor of the Senate, Reid said the following:
Many of our job creators are like unicorns—they’re impossible to find and don’t exist. That’s because only a tiny fraction of people making more than a million dollars, probably less than one percent, are actually small business owners and only a tiny fraction of that tiny fraction is a traditional job creator.
This claim is wildly off base.
Senator Reid’s statistical confusion on small businesses and job creation could be understandable. The statistics were once notoriously difficult to find, because there was no objective definition of small business. But the Treasury Department rectified this with a recent study. It contains firm data that refute Reid’s unsubstantiated and implausible claim.
According to the new Treasury report, 50 percent of the income earned by businesses that pay their taxes through the individual income tax code and employ workers would be subject to the millionaire tax that Senator Reid demands to “pay for” an extension of the payroll tax holiday (see table 15 of the report).
Some “unicorn.” Half of all small-business income is a lot higher than 1 percent, Senator!
The new data make clear that Reid’s millionaire tax is a direct blow to the pass-through businesses that employ the most workers. The tax would deprive these important job creators of resources they could use to add new workers or pay their current workers higher wages. And it would reduce their incentive for taking on new risk and expanding their businesses in the future. This would further reduce the number of new workers they could have hired.
The unemployment rate is still at unacceptable levels, and there appears little hope of it falling to more acceptable levels anytime soon. The last thing those searching for work can afford is an unnecessary tax hike, driven by a divisive desire to instigate class warfare, which would punish the businesses they need to put them back to work. It is time to get the facts straight and stop this unhealthy obsession with raising taxes.