Peach State Piffle

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.

Who's Refusin'?
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-Constitutionreported 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.

Largest Increase? Or Biggest Cut?
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?