In the overheated – and often false – rhetoric of politics, glib sound bite claims and charges are too often presented as fact when a little checking shows quite a different message. Here are three currently popular charges – mostly Republican – that are not quite what they appear.

First: “The Obama administration has created a wave of new regulations strangling business, prohibiting growth and stopping companies from hiring.” Various versions of those claims have been around a long time.

The U.S. Bureau of Labor Statistics regularly surveys business to take the pulse of the marketplace. First quarter this year, 2,085 new unemployment claims nationwide were attributed to “government regulation.” Nearly 55,760 were tied to “insufficient demand” for products and/or services.

The fact here: companies are more worried about poor sales. Dr. Gary Burtless, labor economist with the conservative Brookings Institution, puts it this way. “There’s little evidence suggesting regulations are killing jobs. It’s more a lack of confidence in marketing of products and services.” And he adds, “There are business leaders who blame regulations even when the economy is booming.”

As for claims the 2010 health care law and the Dodd-Frank financial reform law are “job killers?” Well, the Congressional Budget Office says those laws haven’t gone into full effect so how can they be limiting jobs?

In short, my guess is reduced profits and fewer sales provide the fertilizer to the “too much regulation” complainers.

A second not-so-true claim by politicians: “Give companies more tax breaks and they’ll bring their profits (dollars) home.” Maybe. Maybe not.

Bi-partisan bills now in the House and Senate are being are being hyped that they’ll coax U.S. based companies to bring overseas profits home by offering a lower tax on earnings than the current 35% for strictly U.S. goods and services. Backers of reducing taxes on profits claim companies have more than $1 trillion “trapped” abroad in low-tax companies. Let’s check.

The Joint Congressional Committee on Taxation says the fact is large portions of earnings of big companies – read profits – are kept liquid. That liquidity, in turn, is largely in U.S. investments, commercial paper and Treasury notes. So, much of those profits “trapped” overseas is already at work somewhere – at home – in the U.S. economy.

A new report from the Congressional Subcommittee on Investigations out this month shows a 2004 tax “holiday,” to give businesses the same sort of relief on taxed profits, resulted in a loss of some 21,000 jobs in just 15 corporations benefitting. Further, it said other studies found no evidence that any “tax holiday” increased overall employment.

So let’s just conclude here that independent facts don’t really show letting companies keep more profit means more jobs and more U.S. investment.

The third political claim that doesn’t stand up to investigation is this: “Raise taxes on the rich and you put job creation at risk.” Republicans are holding out for 33% and 35% which are now top tax rates. The Obama administration wants 36% and 39.6%. The GOP claims small businesses would be hurt because many of them file under tax laws for individuals.

Urban Institute Resident Fellow Economist Howard Gleckman says that’s just not true. “In sharp contrast to the rhetoric,” he says, “current data suggests (a) small businesses do not create an outsized number of jobs, (b) very few small business owners fall into the top two brackets and (c) tax cuts for small businesses have proven to be ineffective stimulus measures.”

Then there’s the nonpartisan Congressional Budget Office report saying “only 2.5% to 3.5% of small business would be affected by rate increases.” Instead, almost all individuals who report small business income fall into lower brackets. Further, CBO says those few small businesses in the top two brackets are usually doctors, lawyers and members of limited partnerships and not “mom and pop” owners.

Also in the report, while small businesses do create some jobs, the number of them that fail is very high which means the jobs go when the doors close. Thus, trying to cite small businesses as “significant job creators” that would be hurt by higher tax rates really s-t-r-e-c-h-e-s the point.

So, let’s sum up. Unbiased evidence shows regulations are not always “job killers” as many politicians continually assert. Reducing taxes for multi-national corporations won’t necessarily mean more profit kept at home or more jobs created. Increasing corporate tax rates by about 3% won’t have a large affect on small business.

It took me about two hours to do the research for this column. Sound bites of claims to the contrary from politicians take 15-20 seconds. You are I are reading my findings while tens of millions of people hear the TV quotes. So which information will go to the polls with voters in November?


Comments are closed.