Tax Cuts For US Small Business Have Been Exaggerated, Says Study

by Leroy Baker, Tax-News.com, New York

15 October 2004

Recent research undertaken by a leading economic think tank has suggested that President Bush has misled with his claims that tax cuts passed under his stewardship have significantly benefited the nation’s small businesses.

According to an analysis conducted by the Urban Institute-Brookings Administration Tax Policy Center, only 1.3% out of 32.8 million tax returns that reported small business income have benefited from the reduction in the top rate of income tax to 35% from 39.6%.

The study also found that that the President's estate tax repeal will benefit relatively few estates with small business assets as most are exempt from the levy.

The conclusions have been seized upon by Joel Friedman, senior fellow at the Center on Budget and Policy Priorities, who last month completed a study aiming to debunk what he claimed were President Bush’s exaggerated claims over the benefits of his tax cuts.

Friedman told reporters on Tuesday that Bush’s claims "hold true primarily for a small, rather elite group of businesses - those whose owners have very high incomes and have accumulated significant wealth".

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