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ABC Uses Obama Talking Point to Counter 'Joe the Plumber'

     ABC’s “World News with Charles Gibson” had no problem with playing the role of campaign defender Oct. 16. The programs took aim at Joe “the Plumber” Wurzelbacher’s complaint-turned-McCain debate talking point about higher taxes under Obama. It didn’t address whether considering a tax increase in a weak economy is a dumb idea.


     “This all began with an encounter Joe Wurzelbacher had with Obama in Ohio,” ABC correspondent John Berman said. “McCain seized on this last night.”


     Berman cited an unsourced statistic – one similar to a talking point Obama has used on the campaign trail – to suggest Wurzelbacher’s concern over higher taxes for his small business was unfounded.


     “Which means right now, Joe could actually see a tax cut under Obama’s plan. In fact, some 95 percent of small businesses make less than $200,000,” Berman said.


     It was similar to what Obama said at the town hall presidential debate on Oct. 7, when he argued that “only a few percent of small businesses make more than $250,000 a year. So the vast majority of small businesses would get a tax cut under my plan.”


    As a release from Americans for Tax Reform pointed out, the Obama’s number is incorrect and the organization cites the Internal Revenue Service.


     “There are 28 million small business owners in the U.S. Of these, about 3 million make $200,000 per year or more. Two-thirds of small business profits are earned by these business owners. Small businesses pay their business taxes on their personal returns, so increasing tax rates on these 3 million business owners increases taxes on two-thirds of small business profits: http://www.irs.gov/pub/irs-soi/06in14ar.xls.” That 3 million works out to just under 11 percent of small businesses.


     And the $200,000 figure isn’t way under the limits of what could be defined as a “small business.” According to the Small Business Administration (SBA) Web site, a small business is defined as the following:


“The Small Business Act states that a small business concern is ‘one that is independently owned and operated and which is not dominant in its field of operation.’  The law also states that in determining what constitutes a small business, the definition will vary from industry to industry to reflect industry differences accurately.”


     Some examples of small business were compiled by “Patterico’s Pontifications” from the SBA’s Table of Small Business Size Standards, which sets the maximum average annual receipts by industry that a business can have and still be classified as a small business – all which exceed $200,000 a year:


Crop production of all types — $750,000
Animal production except for cattle & chicken/eggs — $750,000
Cattle feedlots — $2.5M
Chicken/egg production — $12.5M
Forestry & logging — $7M
Fishing — $4M
Irrigation, sewage, water supplies — $7M
Housing construction — $33.5M
Heavy and civil engineering construction — $33.5M
Dredging and cleanup — $20M
Concrete, framing, and other housing contractors — $14M
Car dealers — $23-29M
RV, motorcycle, & boat dealers — $7M
Furniture, hardware, clothing & sporting good stores — $7M
Electronic stores — $9M
Supermarkets, gas stations & department stores — $27M
Pharmacies — $7M


     There is one possible exception Berman pointed out – how small business owners file their taxes, whether as a corporation or as individual income. However, neither Obama, nor the ABC report specify if a small business is one which the owner files individually or as a corporation.


     “True or false – it depends,” Berman said. “Obama has said he will raise taxes by some 3 percent on individuals making more than $200,000, and families making $250,000. Many people file their small business taxes as individuals. So, if Joe’s hypothetical company did make more than $200,000, he would see an increase.” So if Joe’s company was like 3 million others that make two-thirds of all small business profits, it would affect him.