Candidates Need to Check Economic Facts

A weak jobs number last week continued a steady stream of bad economic news -- more than 400,000 jobs have been lost since December -- forcing the presidential candidates to return to discussion of the economy.

Both candidates gave speeches Monday on the subject. While no earth-shattering proposals came to light, the candidates continued to squabble over whose economic plan offers job growth. Not surprisingly, neither candidate correctly stated the facts.

Sen. John McCain (R., Ariz.) began by attacking Sen. Barack Obama (D., Ill.) on familiar territory: taxes. He claimed Obama would raise taxes on small business owners who are a mainstay of job creation in the U.S. economy:

Senator Obama's tax increases will hurt the economy even more, and destroy jobs across this country. If you are one of the 23 million small business owners in America who files as an individual rate payer, Senator Obama is going to raise your tax rates. If you have an investment for your child's education or own a mutual fund or a stock in a retirement plan, he is going to raise your taxes.

McCain made a large mistake -- and not for the first time -- stating individuals with retirement plans would be subject to capital gains taxes. He should know better and know the rules. He voted in favor of creating retirement accounts while serving in Congress, and whether you choose a Roth IRA and pay income taxes upfront or a 401(k) avoiding income tax, neither involves capital gains.

McCain's other claims prove only partially correct. Obama would raise taxes to pay for proposals, but who would absorb higher rates?

The Obama campaign said Obama would raise taxes on only those people who earn more than $250,000 a year. Their taxes would go back to the same rates -- 39% -- seen under President Bill Clinton. I would guess that very few small business owners actually make that much. The 23 million number also likely included people who have a job and a small business on the side who take tax exemptions for expense purposes.