Those who took our suggestion to keep an eye out for common Republican claims during this weekend’s GOP Presidential Debates got plenty of evidence that candidates continue to feel free to make statements that are at variance with the facts. We continue to challenge the public – and, especially, the media – to be alert for these frequently repeated claims, and be familiar with the facts that reveal them to be unsubstantiated or simply untrue. We need to be ever-vigilant about such systematic attempts to mislead the public.
When you hear: The Wealthiest Americans are “Job-Creators,” so taxing them will be a “job-killer”
Keep in mind:
Let’s start out with logic and reason applied to past history. Think about it: if cutting taxes for the wealthiest Americans stimulates the economy and creates jobs, the historic Bush Tax Cuts should have generated a legacy of tremendous job growth over the rest of the decade. To the contrary, there was zero net job creation during the first decade of the millenium — whereas every previous decade since the Great Depression had job growth of at least 20%.
If the Bush Tax Cuts are allowed to expire, the top tax rate (which would return to 39.6% from its current level of 36%) will apply only to income in excess of $250,000 per couple or $200,000 per individual in most proposals. This relates to only those “small businesses” organized so that profits are taxed as ordinary income.
A review of government data indicates there isn’t a single category of “small business” that averages more than $200,000 a year in income (the highest incomes are for doctors, lawyers, engineers, and sales managers, who range from $100,000-$150,000). Among the more than 12 million non-farm self-employment income tax returns filed (farms have different tax laws and subsidies), the average annual income was $31,246.
Let’s repeat that.
THE AVERAGE ANNUAL “SMALL BUSINESS” INCOME IN THE UNITED STATES IS LESS THAN $32K/YEAR.
The New York Times cites data the Joint Committee on Taxation and the Tax Policy Center (a nonpartisan research organization) showing that “fewer than 3 percent of filers with small-business income pay at the top two income tax rates, and many of those are doctors and lawyers in partnerships” (please see above figures: even doctors and lawyers average well less than the $200k/year threshold).
All this means that LETTING INDIVIDUAL INCOME TAXES RETURN TO THEIR PRE-BUSH LEVELS WOULD HAVE ABSOLUTELY NO AFFECT ON THE VAST MAJORITY OF AMERICAN SMALL BUSINESSES.
It is perhaps put best and most simply by multimillionaire Henry Bloch — co-founder and chairman emeritus of the tax preparation company H&R Block and a registered Republican. Bloch calls the suggestion that tax cuts for the wealthy create jobs, in a word, “baloney.” Bloch points out: “Rich people don’t create jobs. Companies create jobs.” And companies are not affected by letting the Bush Tax Cuts expire.
When you hear: Cutting corporate taxes and reducing regulation will create jobs.
Keep in mind:
Two recent surveys indicate that taxes and regulation are at the bottom of the list of reasons why small business are not hiring. Business owners themselves blame weak demand from a lack of consumer spending.
Yet, the House Republicans “Jobs Plan” is based on the presumption that tax cuts and deregulation would spur job growth. That is simply not true – according to business owners themselves.
When you hear: President Obama’s disastrous economic policies are destroying jobs.
Keep in mind:
It is enlightening to compare data from the Obama Administration thus far with the same period of the previous Administration. According to the Bureau of Labor Statistics, during the first 35 months under George W. Bush, there were 26 months with net job losses in the private sector, and nine months when jobs were added, including four consecutive months of job growth. Mind you: this includes more than two years after the first round of supposedly stimulative tax cuts for the wealthy. In months when there was job growth, the average gain was 76,000.
Contrast this with employment figures for the Obama Administration. After taking office during the worst economic crisis since the Great Depression, there were job losses for the first 13 months of Mr. Obama’s term. Since the implementation of the stimulus package (which is typically referred to by Republicans as “failed” stimulus), the U.S. experienced 22 consecutive months of job gains, the longest streak of monthly job growth since the first term of President Jimmy Carter.
Job growth under Mr. Obama has averaged 143,000 over those 22 consecutive months of growth – roughly twice the average monthly job growth of the nine positive months under President George W. Bush.
Under George W. Bush:
The U.S. suffered a net total loss of 2,910,000 private-sector jobs.
The sum of all positive growth months: 683,000 jobs
Under Barack Obama:
The U.S. has had a net total loss of 1,053,000 private-sector jobs – during the worst economic crisis since the Great Depression.
The sum of all 22 consecutive growth months is now 3,156,000 new jobs or 462% more job growth than under Mr. Bush’s tax-cutting policies.
When you hear: Americans are over-taxed
Keep in mind:
If you look at taxes as a percentage of Gross Domestic Product, the United States has the third-lowest taxation in the Developed World. Only Mexico and Chile tax their citizens less.
When you hear: President Obama and the tax-and-spend Democrats have exploded the nation’s deficit and debt
Keep in mind:
When comparing contributions to the current National Debt under the past two Administrations, the vast majority (78%) is attributable to President George W. Bush:
(Source: NY Times, “How the Deficit Got This Big” By TERESA TRITCH, July 23, 2011)
When you hear: President Obama and the Democrats want to expand the size of government, but Republicans believe in small government.
Keep in mind:
The federal workforce is the lowest in decades, when measured as a ratio of federal employees to a thousand American citizens. Under Ronald Reagan, the number of federal workers per thousand citizens went from 12.49 to 12.62. Reagan not only expanded the federal budget and deficits, but also increased the total number federal workers by a quarter million to more 3,114,000 by 1989.
Since 1989 the US population has grown by 61,926,308 new citizens or 25%, but over the same time the ratio of federal workers continues to decrease.
Under George W. Bush the ratio went from 9.75 employees per thousand Americans down to 9.18, and now under Barack Obama the number has reached a new low of 9.12 per thousand Americans.
Not only has the ratio decreased by 27% from Reagan to Obama, but the total number of federal workers has also gone down by 297,000 employees from a high of 3,114,000 employees under the Reagan Administration in 1989.
For the record: according to the Office of Management and Budget, the highest ratio of federal workers per thousand citizens was under Richard Nixon (14.4). Barack Obama’s ratio is the lowest since 1962 (9.12). The total number of federal workers reached its maximum under President George H. W. Bush.
Compared with Ronald Reagan, the Obama Administration is serving 25% more Americans with 9% fewer federal workers, and spending proportionally less money to do it: when comparing the percentage of U.S. GDP represented by various areas of federal government operations, from the Reagan Administration to the Obama Administration, spending has dropped by 12% (Defense) to 75% (Agriculture).
The only budget areas where government spending has increased as a percentage of GDP are the contribution-based retirement programs (Medicare and Social Security) and Medicaid.
Conclusion: The United States under the Obama Administration has fewer federal workers, and spends a smaller portion of our operational budget, than we did under Ronald Reagan.
When you hear: Too many Americans are getting a “free ride” by not paying federal income taxes
Keep in mind:
The Tax Policy Center confirms that nearly half of American households will pay no federal individual income tax in 2011. Half of these have no tax liability because of basic exemptions for subsistence level income and for dependents: commonly, households earning less than $50,000 a year. So these are half of the households Republicans are talking about, when they suggest some Americans aren’t shouldering their fair share of the nation’s tax burden.
The chart to the right breaks down this group. Three-fourths pay no income tax because of provisions that benefit senior citizens and low-income working families with children.
What Republican fail to mention is that the other half of people who pay no federal income tax have eliminated their tax bill by exploiting special provisions in the tax code that benefit selected taxpayers or activities. These benefits can wipe out tax liabilities and can even yield net payments from the government.
When it comes to having ways to slash tax liability, the most wealthy do best: while they are far fewer in number than the elderly or low-income households that get tax breaks, the wealthy realize a large proportion of the benefits that can result in zero net tax liability: the highest-income 20 percent of the U.S. population enjoys almost two-thirds of the benefits of tax expenditures. More than one-quarter of those tax-reduction benefits go to the top 1 percent alone.
So when Republicans talk about people who don’t pay any federal income tax, perhaps they ought to be asked whether they would support removing deductions, exclusions, and other tax-code provisions that benefit the wealthiest Americans – to be sure they “pay their fair share” of the nation’s tax burden.