What Mike Pence got wrong about the economy and taxes in the vice presidential debate
Republican vice presidential candidate Mike Pence’s opinion on the economy isn’t exactly rosy, as you might expect. At Tuesday night’s vice presidential debate, Donald Trump’s running mate described an “economy stifled by taxation” and spoke of American families “struggling in this economy under the weight of higher taxes and Obamacare.”
Some basic facts about the U.S. economy: It’s true that U.S. economic growth, as measured by annual GDP growth, has been slower in recent years that it used to be. Since the first quarter of 2009, when President Obama took office, quarterly GDP has puttered along at a 1.8 percent annualized rate. (Although, it’s hard to pin the first two quarters of 2009, when the economy was still in recession, on Obama, without which growth would have been higher.) Between 1990 and the end of 2008, U.S. quarterly GDP grew at a comparatively brisk 2.7 percent annualized pace.
But most people don’t think of the economy in terms of GDP. They think of it in terms of jobs. And the jobs picture — after a horrible turn during the recession — has been pretty good. The U.S. has had 71 consecutive months of job growth, that’s the longest on record. And the unemployment rate has fallen from a peak of 10 percent in October 2009 to 4.9 percent in August. What’s more, after years of stagnant wage growth, a recent Census Bureau report showed that median household income rose 5.2 percent in 2015, the biggest jump on record.
So, to the extent growth has been slow, is it related to excessive taxation? Well, among the rich countries that are members of the OECD, the U.S. does have the highest statutory corporate tax rate, at about 39 percent. But thanks to the loophole-ridden U.S. tax system, hardly anybody pays that rate. The rate profitable companies pay is more like 13 percent, according to the Government Accountability Office. That’s just a hair above Ireland’s 12.5 percent tax rate, which is the lowest in the developed world.
The damage from the Great Recession hasn’t been completely healed. But in recent years things have been improving.