Not ALL of the Two percenters are who we think they are points out Bloomberg on the eve a new tax fight between the parties.
They are two-earner professional couples living on the East and West Coasts, doctors, lawyers, engineers and Wall Street executives. Few are billionaires or earn more than $1 million a year, and most are not employers.
“The 2 percent, they’re people who are successful in their professions, but they’re not the absolute rock stars,” said Leonard Burman, an economist at Syracuse University in New York. “There’s a big difference between the 99th percentile and the 99.9th.”
Fewer than 1 percent of the U.S. population have annual income of more than $1 million. In the top two tax brackets, slightly more than one-third — 35.5 percent — were employers receiving business income, according to 2007 figures from the Treasury Department.
The U.S. Senate plans to vote next week on an Obama-backed plan to extend expiring income tax cuts for everyone except these top 2 percent of earners. The Republican-led House will vote the following week to extend the cuts for all income levels.
Obama, including himself in this group of high earners, says they are a fortunate few who can pay more to help reduce the U.S. budget deficit.
“What we’re saying is for those folks, we can afford to pay a little bit more in taxes by going back to the rates that were paid under Bill Clinton,” Obama said in Ohio July 16.
Republicans maintain that the 2 percenters include business owners who would lose the incentive to add jobs if they had to pay higher marginal tax rates.
Each side has its own favorite statistics on the subject, which are accurate and incomplete.
Obama and congressional Democrats like to mention that 97 percent of small businesses wouldn’t be affected by tax increases, because they’re not in the top two tax brackets.
That’s true and misleading, Republicans counter. They note that 53 percent of business income reported on individual income tax returns is earned by taxpayers who would be affected by Obama’s proposal.
Republican presidential candidate Mitt Romney at campaign events emphasizes the theme that Obama’s plan would hurt business owners.
“Dreams are being crushed when taxes go up, and up, and up on job creators, and business creators, when regulations become overwhelming and burdensome, when the people in governments sometimes treat you like you’re the enemy instead of the friend,” he said on July 10 in Grand Junction, Colorado.
Not all of the businesses that pay taxes through their owners’ individual returns are small. The partners in global law and accounting firms, oil pipeline companies and hedge funds all have their business profits flow through to their personal tax returns. Even the small businesses don’t necessarily have employees.