Georgia voters are being hit with misleading ads from both sides as Republican Sen. Chambliss battles Democratic challenger Martin in a Dec. 2 run-off election.
- Chambliss claims in an ad that Martin would work to raise taxes on "nearly every small business in Georgia." In fact, only around 2.4 percent of small businesses nationally earn enough to be affected by the tax plan Martin favors.
- Chambliss also says Martin “refused to return $100 million of surplus taxes” to Georgians. That’s false. Martin voted in favor of the tax relief bill in question.
- A Martin ad claims Chambliss “opposes a middle-class tax cut.” In fact, he supported cuts for middle-income taxpayers. What Chambliss voted against was an amendment that also would have increased taxes on corporations and others.
In one exchange, Chambliss accuses Martin of supporting the largest tax increase in state history, while Martin says he supported the largest middle-class tax cut in state history. It turns out both are right, as we explain fully in our Analysis section.
If you non-Georgians thought the election went on for too long in your state, pity the poor souls in Georgia who are still being bombarded with political ads. Incumbent Republican Sen. Saxby Chambliss and Democratic challenger Jim Martin, a former state representative and head of the Georgia Dept. of Human Resources, along with their parties’ senatorial committees, are continuing to wage a misleading ad war. Any post-election, let’s-all-work-together-now spirit won’t reach Georgia until several days after Thanksgiving, at the earliest.
[TET ] Saxby Chambliss 08 Ad: "Martin’s Economics"
Chambliss: I’m Saxby Chambliss and I approved this message, because Saxby economics is about cutting your taxes. But let’s look at Jim Martin’s economics. Martin voted for the largest tax increase in Georgia history. He increased his own government expense account. But refused to return $100 million of surplus taxes to you. And now wants to help Barack Obama raise taxes on nearly every small business in Georgia. In this election, you have a simple choice: I want to cut your taxes. Jim Martin wants to raise your taxes. [/TET]
In one ad, Chambliss tells viewers that Martin "wants to help Barack Obama raise taxes on nearly every small business in Georgia." Not so. What Obama has proposed would affect only the most affluent 2.4 percent of small-business owners, or less.
We asked what basis the campaign could offer for its claim, and spokeswoman Michelle Hitt Grasso told us in an e-mail: "In Martin’s first television commercial he says that he will work with Barack Obama and according to the Heritage Foundation that means higher taxes on small businesses."
But the report by the conservative Heritage Foundation says nothing about businesses in Georgia, nor does it say that "nearly every small business" would face higher taxes. It says "many" of those whose taxes would increase claim some type of business income or loss on their tax returns. There’s truth to that, but that’s not close to what Chambliss claims in the ad. Even if all who would see a tax increase were small-business owners (which isn’t the case), it wouldn’t mean that all small-business owners would see a tax increase, or even most of them.
Obama said he would raise the marginal tax rate for those earning more than $200,000 a year, or $250,000 a year for couples and families. Small-business owners would indeed face an increase if they earn that much and pay taxes on their business income as individuals. But the number wouldn’t be close to "nearly every small business in Georgia," as Chambliss says. Only a small percentage would be affected.
The U.S. Small Business Administration estimates there were 27.2 million "small" firms (with fewer than 500 workers) in 2007. As we explained in a July 14 article, the SBA counts as a small business anyone who reported as little as $1,000 of business receipts on a tax return. But only 663,000 persons with any sort business income or business losses are projected by the Tax Policy Center to fall into tax brackets that would be affected by Obama’s proposal. Many of those people aren’t really small-business owners; they’re consultants or book authors, lawyers who get partnership distributions, or passive investors earning money on the side. But even if all these upper-income folks did own small businesses, it would mean that only 2.4 percent of small-business owners take home enough to see their taxes go up under Obama’s plan. And we don’t have any reason to think Georgia would differ significantly from the national figure.
Chambliss’ ad claims that Martin "refused to return $100 million of surplus taxes to you." That’s also false. The worst that Chambliss could say truthfully is that Martin was reluctant to return the full amount, and tried to withhold 5 percent to expand services for senior citizens.
Martin – and every other member of the Georgia House – voted for a bill in 1994 backed by then-Gov. Zell Miller to give $100 million worth of income tax breaks. As the Atlanta Journal-Constitution reported in a Feb. 23, 1994, story, a day after the House’s approval: "Miller called the 174-0 House vote on his bill proof that the state was ‘changing the way government does business.’ ‘In the old days, under the old ways, an increase in state revenues would have been treated as feeding time on the hog farm,’ Miller said. ‘I am giving this money back to the hard-working families and senior citizens of Georgia.’ "
The Chambliss campaign bases its false charge that Martin "refused" to grant the tax cut on a quote published in the Feb. 13, 1994, Atlanta Journal-Constitution, in which Martin questioned Miller’s plan to use the money for tax cuts without replenishing the funds for some social programs that had been reduced:
Atlanta Journal-Constitution, Feb. 13, 1994: "There is something wrong with giving $100 million back when we have these unmet needs," said Rep Jim Martin (D-Atlanta), chairman of the human services appropriations subcommittee that had to cut many of the programs. Although Martin’s subcommittee has recommended putting $5 million into the budget to expand services for older Georgians, he is not optimistic it will stay there.
Martin may have been skeptical of the governor’s proposal then, but nine days later, he voted for the tax cut package.
Chambliss and Martin are also dueling with seemingly conflicting claims. Chambliss says that "Martin voted for the largest tax increase in Georgia history." A Martin ad counters by claiming that he actually "helped pass the biggest middle-class tax cut in Georgia history." So which is it?
It turns out, both claims are true. Here are the details.
Tax increase: In 1989, Martin voted to raise the state sales tax from 3 percent to 4 percent. The Atlanta Journal-Constitution called it "the largest tax increase in the state’s history." Citizens for Tax Justice, a liberal group which advocates for "fair taxes for middle and low-income families," estimated that the extra pennies would add up to $165 more in taxes in a year for a household earning $29,000. The bill passed by a vote of 129 to 40.
Tax cut: Seven years later, in 1996, Martin voted for a bill to remove groceries from being subjected to the sales tax. Gov. Zell Miller called it the "largest tax cut in Georgia history," adding, "if you eat, you win." A family that spent $80 a week on groceries – the national average at the time, according to the Atlanta paper – would save $166 a year once the tax was gone.
Chambliss’ ad says of Martin: "He increased his own government expense account." That’s true. Martin voted in 1995 for a $16 increase in daily expense accounts for legislators, from $59 to $75. It was the first such increase in more than 10 years, according to the Senate majority leader at the time, and it passed by a vote of 123 to 48.
[TET ] Jim Martin for Senate Ad: "Recession"
Announcer: Listen to Saxby Chambliss …
Chambliss: We may not be in a recession. I don’t know what that term means.
Announcer: Saxby Chambliss doesn’t understand what a recession means?
Chambliss: We may not be in a recession. I don’t know what that term means.
Announcer: No wonder he opposes the Obama economic recovery plan. And opposes a middle-class tax cut. For six years he voted to get us into this mess. Jim Martin will help Barack Obama cut taxes for the middle class … and get our economy moving again.
Martin: I’m Jim Martin and I approve this message. [/TET]
Martin misrepresents the facts in a recent ad that claims Chambliss "opposes a middle class tax cut." He doesn’t.
Martin’s ad refers to a 2005 Senate vote on an amendment that would have extended tax breaks to victims of Hurricanes Katrina, Rita and Wilma, as well as those hoping to still claim a college tuition deduction or to avoid higher payments under the alternative minimum tax, among other provisions. But it also would have increased some corporate and individual taxes, along with taxes on oil and gas companies. The amendment was killed, and the vote was largely along party lines. The final bill, however, which Chambliss voted for, included many of these same "middle-class" tax cuts, but not many of the increases that Democrats supported.
The campaign also cites Chambliss’ support for President Bush’s tax cuts, claiming that they "favored wealthy Wall Street investors and taxpayers with large incomes like Wall Street CEOs and executives." Perhaps so, but Bush’s tax cuts also benefited low- and middle-income taxpayers. The tax bills reduced the lowest tax bracket to 10 percent from 15 percent, provided tax relief for married couples and increased the tax credit for dependent children, all cuts that Obama and other Democrats support. Regardless of how the affluent made out, Chambliss’ votes for the Bush tax bills are in no way votes against "a middle-class tax cut," as the ad claims. The ad could just as easily have said Chambliss "supports" a middle-class tax cut, citing these same votes.
Martin’s ad also says that for six years, Chambliss "voted to get us into this mess." To support that opinion, the Martin campaign lists numerous Chambliss votes, including those for the Bush tax cuts, for a 2005 bankruptcy bill and for raising the federal debt limit. He also voted against higher taxes on hedge fund managers, against regulations for online trading of energy derivatives, and against pay-as-you-go rules in the Senate. He supported Republican-backed budgets and voted against Democratic alternatives.
But did such a voting record lead to financial calamity? The Martin camp cites just one source as evidence that Chambliss’ votes had an impact on our economic woes: Business Week reported that the 2005 bankruptcy bill had exacerbated the housing crisis, with "[m]ore people being forced to walk away from their homes, leaving lenders holding the bag." But the magazine chalked this up to "the law of unintended consequences" and said the bill was supposed to "help the financial industry." Martin, and other Democrats, may well believe Chambliss’ various votes led to financial crisis, but Republicans have been just as quick to tick off Democratic actions that they feel are the culprits. As we’ve said before, there are no easily determined winners and losers in this blame game.
DSCC Ad: "He Said No"
Announcer: Congress tried to pass better health care for children. But he voted "no." Lower drug prices for seniors? He said "no." Tax cuts for middle-class Georgia families. He said "no." For six years Saxby Chambliss has been part of the gridlock that’s hurt the middle class. But now Georgia can have a Senator who will fight for the change we need. Only Jim Martin will stand up for us. He’s for us. The Democratic Senatorial Campaign Committee is responsible for the content of this ad. [/TET]
The Democratic Senatorial Campaign Committee has also launched attack ads against Chambliss, claiming in one that he "said no" to "tax cuts for middle-class Georgia families."
We find little to support this claim. The DSCC offers a list of votes in which we can see no clear example of Chambliss opposing a no-strings-attached tax cut for middle-income taxpayers.
The closest is Chambliss’ opposition to a Democratic measure in 2003 that would have given additional tax benefits to families making less than $10,500 a year. But those families were well under the poverty level, and we doubt that many would consider them "middle class." The measure would have lowered the income threshold for the child tax credit from $10,500 to $5,000.
Other supposed "middle-class" cuts opposed by Chambliss were either packaged with tax increases or came with conditions. Two bills mainly offered tax credits and incentives for renewable energy, and they came packaged with tax increases on hedge fund managers and multinational corporations. The DSCC cites a vote Chambliss cast in July 2003 against legislation to extend child tax credits to those earning between $10,500 and $26,650 a year. But Chambliss had voted for extending the tax credits a month earlier. The vote DSCC cited amounted to political party wrangling, with Democrats supporting the measure and Republicans voting against it. By late September, disagreements between parties and the two houses of Congress had been resolved, and the Senate approved a bill to extend the child tax credits, with Chambliss voting in favor.
Chambliss also opposed making an increase in the child tax credit retroactive; the bill would have paid for the tax benefit by delaying a reduction in the top marginal tax rate. And he voted against another 2003 bill to give a tax credit to family caregivers, while limiting the tax exclusion of dividends. Both failed along party lines.
— by Lori Robertson
Nell, Guinevere. “How the Obama and McCain Tax Plans Will Affect America’s Small Businesses.” The Heritage Foundation, 30 Oct. 2008.
Foskett, Ken. “’94 Georgia Legislature: House embraces tax cut.” Atlanta Journal and Constitution, 23 Feb. 1994.
Hardie, Ann. “We’ve got to find a way.” Atlanta Journal and Constitution, 13 Feb. 1994.
Georgia House Journal, pages 1160-1166, 22 Feb. 1994.
Georgia House Journal, pages 2143-2150, 8 March 1989.
May, A.L. “GOP: Tax Hike Could Doom Democrats’ Dynasty.” Atlanta Journal and Constitution, 12 March 1989.
O’Shea, Brian and A.L. May. “State Sales Tax Will Be Raised a Penny April 1.” Atlanta Journal and Constitution, 9 March 1989.
“Governor Zell Miller Accomplishments.” Georgia state Web site, accessed 20 Nov. 2008.
Salzer, James. “Boost in Expenses Approved Governor Signs Bill Giving State Legislators More Money After Axing Accompanying Property Tax Cut.” Augusta Chronicle, 25 April 1995.
Georgia House Journal, pages 714-718, 9 Feb. 1995.
S. Amdt. 2602 to S. 2020. U.S. Senate. Vote # 330, 17 Nov. 2005.
S. 2020. U.S. Senate, 18 Nov. 2005.
Farrell, Christopher. “Bankruptcy Reform Bites Back.” Business Week, 29 Oct. 2007.
H.R. 6049. U.S. Senate. Vote # 150, 17 June 2008.
S. 3335. U.S. Senate. Vote # 192, 30 July 2008.
S. Amdt. 3039 to S.Con.Res. 83. U.S. Senate. Vote # 42, 14 March 2006.
"Fall Agenda: Child Tax Credit Expansion." CQ Weekly Online (August 30, 2003): 2079-2080.
S.Amdt. 578 to S. 1054. U.S. Senate. Vote # 153, 15 May 2003.
Firestone, David. “Senate Democrats Start Push to Revive Tax-Credit Bill.” New York Times, 10 July 2003.
S.Amdt. 611 to S. 1054. U.S. Senate. Vote # 166, 15 May 2003.
S.Amdt. 605 to S. 1054. U.S. Senate. Vote# 169, 15 May 2003.
S.Amdt. 619 to S. 1054. U.S. Senate. Vote #162, 15 May 2003.