When Louisiana Congressman John Fleming said he is not in favor of increasing the tax rate for those making $1 million and more per year, you need to probe a little deeper to understand that his real motive in opposing higher taxes might be just a tad self-serving.
Interviewed right after House Speaker John Boehner, R-Ohio, withdrew his “Plan B” fiscal cliff bill which would have extended the Bush-era tax cuts to all households making less than $1 million per year, Fleming made his position crystal clear.
“Raising taxes on any American to me is not the right message, he told CBS reporter Nancy Cordes. “The right message is cutting spending.”
But to fully understand what Fleming, a Minden Republican, is really saying, we have to go back more than a year to Sept. 19, 2011, and review his MSNBC interview with Chris Jansing, giving particular attention to the numbers being bandied around in that interview.
Jansing reminded Fleming that his businesses (Subway sandwich and UPS franchises) earned $6.3 million in 2010.
Fleming said that while his businesses made $6.3 million, “Income flows to my personal tax return. My net income is a mere fraction of $6 million since my net income is more like $600,000. By the time I feed my family, I have maybe $400,000 left over.”
That’s right, folks, Congressman John Fleming, that man of the people whose only concern is the welfare of good, hard-working Americans, can barely make ends meet on $600,000 per year. And that doesn’t even include his $174,000 per year congressional salary, free mail (franking) privileges, district office, furniture and staff.
The average household income in the U.S. in 2010 was just under $50,000, down 2.3 percent from 2009.
“Class warfare has never created a job,” he said in that interview. “Most people feel owning a business is a virtue, not a vice.”
That, folks, is called spin.
That $6.3 million is “before you pay 500 employees, you pay rent, you pay (for) equipment and food,” he protested, almost to the point of whining.
But his numbers just don’t add up so let’s break them down and then you can decide for yourself just who is promoting class warfare.
Let’s begin with that $6.3 million. By his own admission, he receives $600,000 of that, which leaves a trifling $5.7 million with which he claims he pays 500 employees, pays rent, purchases or leases equipment and buys food for his Subway restaurants.
For the time being, let’s discard all the expenses for rent, equipment and food and say, for the sake of argument, that the entire $5.7 million goes for salaries of those 500 employees.
That works out to $11,400 per employee—UPS drivers, sandwich makers, and supervisory personnel.
The poverty level for a one-person household in America in 2010 was $11,344.
Assuming that his UPS drivers and management personnel were making substantially more than that $11,400 average, reason dictates that the remainder of his workers were among America’s working poor.
Fleming told Jansing President Obama’s deficit reduction plan was a terrible idea which kills jobs provided by wealthy “job creators.”
Whether or not one agrees with Obama, Fleming’s position is a little difficult to square up against the numbers he threw out to Jansing.
Of course Fleming was either grossly exaggerating the number of employees or grossly understating the income from his business enterprises which also include numerous other investments.
Or his employee turnover rate is such that he really did go through 500 workers during 2010 as personnel came and went after unusually brief tenures which would translate into far fewer people on the payroll at any given time.
Not that Fleming is a poor businessman. He already had the good sense to set his businesses up in such a way as to minimize his corporate taxes.
Under the federal tax system, the income of corporations is taxed twice—once at the corporate level through the payment of the corporate income tax and again at the individual rate when corporate profits are distributed. Sole proprietorships, partnerships, S corporations and limited liability companies (LLC) are taxed only at the individual owner level.
According to his congressional financial statement, his companies are all set up as LLCs and partnerships which would explain his statement that the $6.3 million flowed through his personal income taxes.
Congressional financial statements are vague at best, thanks to the requirement that income and liabilities are generally listed within a spacious range between the low and high ends.
For example, here are Fleming’s 2011 income ranges from the following sources:
• Park City Health Services (Fleming also is a physician)—$1 million to $5 million;
• JCF Properties Limited Partnership—$100,000 to $1 million;
• Fleming Franchise Development—$100,000 to $1 million;
• Fleming Subway Restaurants—Over $5 million;
It’s not that we mean to come down too hard on the good congressmen. After all, he went through some tough financial times from 2007, the year before he was first elected, to 2010, the latest year for which figures are available from OpenSecrets.org, as reported by the Washington Post.
His net worth plummeted from $24 million in 2007 to a paltry $6.5 million in 2008 before eventually climbing back to $10.2 million in 2010.
That included $3.8 million in real estate, $3.6 million from his private companies and $3.2 million from unspecified sources.
He did pretty well, too, in attracting big ticket campaign contributions in 2011-2012.
Of the $1,229,259 in total campaign contributions, $1,202,416 (77 percent) was classified as large individual contributions while a mere $26,843 (2 percent) came from small individual contributors.
Another $321,363 (21 percent) came from political action committees, including, among others, Northrop Grumman’s PAC ($15,000), The American Academy of Orthopaedic Surgeons and Every Republican is Crucial PACs ($10,000 each), National Association of Realtors (8,010), the Shaw Group ($8,000) and the National Beer Wholesalers Association ($7,500).
Other contributors included:
• Atco Investments: $29,000;
• Gamble Guest Care: $15,100;
• Kinsey Interests: $12,300;
• Builders Supply Co.: $12,100;
• Willis Knighten Hospital: $7,200;
• Louisiana State University: $11,850.
We can only hope things pick up for Congressman Fleming in 2013 so that he can feed his family a little better and bring the pay scale of his employees up to the national poverty level and perhaps even endure a tax increase for him and his poor millionaire friends.