Peach State Piffle

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.

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]