Debate Fact Check Highlights

Here are some economics-related points from Think Progress and the Washington Post's fact checks:

9:40 p.m.
McCain just recyled a frequent claim, that Obama has voted to raise taxes on people making $42,000 a year. It's based on Obama's vote this year in support of a non-binding Democratic budget resolution that would allow the Bush tax cuts to expire in 2011 and 2013.

Independent analysts have asserted this claim is misleading since the resolution did not actually call for raising taxes, but set budgetary targets based on the premise that the tax cuts would expire. Obama has separately promised that he would extend the Bush tax cuts for any family making less than $250,000.

9:58 p.m.
John McCain made two assertions on corporate taxes, one that small businesses pay 50 percent of the taxes and the other that U.S. corporations are among the highest taxed in the world. Both are wrong.

All corporate income taxes--including giant corporations and the smallest of businesses--account for only about 14 percent of federal revenues raised in the year, according to the Congressional Budget Office. Most federal taxes are paid by individuals, while fees and other taxes make up the rest.

While the official corporate tax is high, compared to other countries, there are so many loopholes in the code that many companies pay little or no taxes. The General Accounting Office reported recently that more than half of U.S. corporations paid no federal income taxes during the boom years of the late 1990s, and those that did were able to shelter much of their income, generally by claiming deductions and credits.

The GAO report showed that 61 percent of U.S. corporations paid no federal income taxes from 1996 through 2000, a period of rapid economic growth and rising corporate profits.

An estimated 94 percent of U.S. corporations reported tax liabilities amounting to less than 5 percent of their total income in 2000. Indeed, small corporations were more likely to avoid taxation than large ones, the GAO said.

10:15: Throughout the night, McCain has repeatedly invoked “Joe the Plumber.” For the record, the plumbers union — the United Association — has endorsed Obama, saying that his policies would “help us keep existing jobs and work to develop new, higher paying jobs here in America.”

10:04: McCain bragged that he would give every family a $5,000 tax credit to buy insurance. Unfortunately, McCain’s credit depreciates over time and would not cover the average health care premium of $12,000.

9:52: McCain said that if we start drilling offshore now it will lower the price of a barrel of oil. But his top economic adviser, Douglas Holtz-Eakin, admitted in June that “new offshore drilling would have no immediate effect on supplies or prices.” (UPDATE: The Energy Information Administration says expanded drilling “would not have a significant impact on domestic crude oil and natural gas production or prices before 2030.”)

9:23: McCain says “I would fight for a line-item veto.” A line-item veto was signed into law years ago and ruled unconstitutional in 1998.

9:21: McCain’s across-the-board, hatchet-like spending freeze is still a counterproductive pro-cyclical measure as we head into a recession, reminiscent of Herbert Hoover’s austerity budgets that deepened the Great Depression.

9:16: McCain calls opposition to tax cuts for the rich “class warfare,” but in 2002 McCain said he couldn’t “in good conscience support a tax cut in which so many of the benefits go to the most fortunate among us.”

9:16: John McCain has suggested that the example of Ireland justifies his plan for a cut in the corporate income tax. In fact, Ireland raised close to 4 percent of GDP in revenue, far more than the 2.2 percent of GDP currently raised by the American corporate tax rate.

9:14: McCain suggested that his tax plan would help small businesses. But in reality, McCain’s tax plan would disproportionately benefits large corporations, giving $46 billion dollars to the Fortune 200. (UPDATE: Loopholes in the tax code allow two-thirds of U.S. corporations to pay no taxes at all.)

9:11: McCain is portraying his tax plans as primarily benefitting small business owners. FactCheck.org has previously called McCain’s claims in this regard ”bunk”. In fact, only a minority of small business owners would benefit from McCain’s proposals.

9:07: McCain says Fannie Mae and Freddie Mac “caused the subprime loan situation.” But as McClatchy noted this weekend, “private sector loans, not Fannie or Freddie, triggered crisis.” The original meaning of a “subprime” mortgage was a mortgage not up to Fannie/Freddie standards. Fannie and Freddie got into the subprime game late, and most subprime loans had nothing to do with Fannie or Freddie.