Grading PolitiFact: Marco Rubio and taxing small business

It's the old "true but false" trick.

The issue:

clipped from PolitiFact.com

The fact checkers:

Angie Drobnic Holan:  writer, researcher
Bill Adair:  editor


Analysis:

First things first, the context:




PolitiFact provides a partial transcript with its quotation of Rubio:

To explain his vote, U.S. Sen. Marco Rubio, R-Fla., released a statement that day:

"As someone with a student loan and with a state with so many people with student loans, I support a hundred percent making sure that the interest rates on student loans do not go up," Rubio said.

"I cannot support the way the Democrats want to do it, however, because, they want to do it by raising taxes on small businesses, very small businesses. The kinds of small businesses that give jobs to graduates who not only need low interest rates but need jobs in order to pay their student loans."

Rubio went on:

"We have a plan to keep student interest rates low that doesn't raise taxes.  And I hope the Democrats will give us a vote and a chance to pass that."

Rubio tries to make the point that the Republican plan to keep student loan rates from rising does not raise taxes compared to a Democratic Party plan that does raise taxes, and Rubio mentions the entities affected by the tax hike.

What fact shall we check, PolitiFact?

We decided to check out Rubio's claim that Democrats want to raise taxes on "small businesses, very small businesses … the kinds of small businesses that give jobs to graduates."

It's not often one sees an ellipsis used to take the place of a period.  But at least we have the answer to the question.  Let's see how PolitiFact executes the fact check.

PolitiFact:

To fact-check Rubio's statement, we read the text of the legislation the Democrats were proposing, examined a summary of the bill provided by the nonpartisan Congressional Research Service, and ran the proposal by the experts at the Tax Policy Center, a respected independent think tank that focuses on taxes.

Reading the text of the legislation is a good move.  Going to an expert from the Tax Policy Center isn't a bad move, either, if we overlook the fact that it is associated with the center-left Brookings Institution as well as the fact that the consultation with experts stops there.

It doesn't exactly represent a good faith effort to "interview impartial experts."  But let's move on to PolitiFact's reasoning.

PolitiFact reports that the bill limits the tax increases to S-corporation beneficiaries who a) are married and make over $250,000 adjusted gross income, b) are married filing separately while individually making over $125,000 adjusted gross income or c) are individuals making over $200,000.  Democrats promoting the bill say it is targeted at closing a tax loophole that allows some parties to sidestep payroll taxes.

So let's say all that is true.  Is it therefore false that the Democratic proposal raises taxes on small (and very small) businesses?  If it does not affect small businesses then what types of businesses are affected?

PolitiFact doesn't say, at least not explicitly.  Instead we get an implicit answer:
Rubio said he opposed the Democratic bill on student loan interest because it would raise taxes on "small businesses, very small businesses … the kinds of small businesses that give jobs to graduates."

Actually, the bill changed tax rules only for S-corporations, and only on professionals like lawyers and accountants who could be taking advantage of the tax code to avoid paying payroll taxes ...We rate Rubio’s statement False.

PolitiFact just implicitly informed us that small and very small businesses are not taxed more under the Democratic proposal.  We deduce that therefore if any businesses are affected they are medium, very medium, large and/or very large businesses.

How did we end up with that apparently absurd conclusion?  Easy.  PolitiFact interpreted Rubio to say that the Democratic tax change affected small and very small businesses broadly speaking.  In other words, small businesses in general were the target of the tax change rather than a specific subclass of (small) businesses.

Why use that interpretation instead of taking Rubio to mean that the businesses paying for the tax would fall into the smaller business demographic?

That's the $64,000 question.  PolitiFact offers no reason justifying its interpretation other than to claim that people might well take it that way:

Rubio's statement gives the impression that all kinds of mom-and-pop operations might be subject to new, additional taxes, when actually the bill is aimed squarely at high-income professionals who are taking advantage of a loophole.

Is that good enough?

If it's good enough then why do we not equally pay attention to the risk that voters watching Obama's "Julia" cartoon will think a President Romney threatens their right to fight for equal pay?

Obama "Mostly True" and Rubio "False"?  Seriously?

Rubio's claim is literally true, assuming  some "very small" businesses would end up paying for the closed tax loophole.  One could present all types of caveats about the extent to which Rubio fails to present the full picture, but similar complaints could most certainly apply to the Obama campaign's "Julia" Web ad.

We end up with yet another outstanding illustration of the subjective nature of PolitiFact's grading system.  And once again the conservative receives the harm.


The grades:

Angie Drobnic Holan:  F
Bill Adair:  F


Taking PolitiFact's grading system literally, it should not be possible to grade a literally true statement like Rubio's "False."  Yet somehow you did it, PolitiFact.  Amazing.

PolitiFact has yet to learn how to apply the principle of charitable interpretation with anything remotely resembling fairness, assuming anyone on the staff even knows what it is.

Or maybe they're just in the tank for the Democratic Party.  I can't dismiss that hypothesis when PolitiFact produces stories like this one.


Clarification 5/15/2012: Traded out "In other words, such businesses would feel the effects of the law more commonly than not" in favor of  "In other words, small businesses in general were the target of the tax change rather than a specific subclass of (small) businesses)."  Later added sections b) and c) to the description of parties affected by the tax.  My apologies for the temporary omission.