The Truth About Jobs, the Deficit, and Taxes

The U.S. economy is often mischaracterized by both lawmakers and commentators intent on advancing a political agenda. With next year's elections fast approaching, economic myths are sure to proliferate. In this latest installment of its Myth Buster series, uschamber.com sets the record straight on the U.S. economy.

Myth: Good jobs are disappearing.
Reality: The U.S. economy continues to churn out new jobs. The national unemployment rate is 4.7%-below the average of any of the last four decades. From July 2007 through September 2007, some 292,000 new jobs were added to the economy. Since August 2003, the economy has created more than 8.4 million jobs.

Myth: Workers' earnings are stagnant.
Reality: Real wages rose 1.7% last year, faster than the average rate of the 1990s, equating to an extra $1,030 for the typical family of four with two wage earners.

Myth: The federal budget deficit is soaring out of control, in large part because of the Bush tax cuts.
Reality: The Congressional Budget Office estimates that the deficit fell by 35% to $161 billion in the fiscal year that ended September 30. Deficit spending has tumbled by $251 billion since 2004. Increased tax revenues are a major reason for this decline. Nevertheless, the deficit is expected to climb in future years unless Medicare and Social Security are fundamentally reformed.

Myth: Businesses aren't paying their fair share of taxes under the current administration.
Reality: Businesses are paying more in taxes in dollar terms now than at any time in history. Corporate income tax receipts in 2006 totaled $354 billion, which was 14.7% of total federal tax receipts. The most that businesses paid in income tax during the 1990s was $189 billion in 1998, and their biggest share of the total tax burden was 11.8% in 1996.

Myth: U.S. corporations have a lower tax burden than their counterparts in other developed countries.
Reality: Because advanced developed nations have significantly cut corporate income tax rates during this decade, the United States now has the second-highest statutory corporate tax rate-39.3% (35% federal plus a state average of 4.3%)-among its competitors. The experiences of these other tax-cutting nations show that lower corporate tax rates with fewer loopholes can lead to more-not less-tax revenue from business. For example, Ireland has a 12.5% corporate rate, yet collects 3.6% of GDP in corporate revenues. In contrast, the United States, with a corporate rate more than three times higher, has been averaging less than 2.5% of GDP in corporate receipts.

Myth: The wealthy have benefited most from the Bush tax cuts.
Reality: The rich are paying more in taxes than they did in 2000. IRS data from 2005 (the last year for which data are available) show that the top 1% of all households paid more than 38% of total federal income tax liabilities. The top 10% paid nearly 70% of federal income taxes; the top 25% paid more than 85%.

Myth: The rich pay less in taxes as a percentage of income than middle- and low-income earners.
Reality: According to Congres-sional Budget Office data from 2004 (the most recent available data), the top 20% of all households paid more than 25% of their income in taxes. The lowest quintile had an effective tax rate of less than 5%.

Go to http://www.uschambermagazine.com/ to learn more.