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During a recent interview on Fox & Friends, Donald Trump offered a digression on tax policy -- at times an unorthodox one, at least for a Republican.
For instance, Trump said that hedge fund managers -- some of them the billionaire counted as "friends" -- are "not paying enough tax." He also rejected a flat tax, an idea supported by some Republicans, countering that progressivity in the tax code is important. "As you make a certain amount of money, I think you should have to graduate upward" in tax rates, Trump said.
Then he shifted gears again, articulating a more traditional Republican argument in favor of lowering taxes. "Look, we’re the most highly taxed nation in the world — that’s why taxes have to go down, business has to come back, jobs have to be back," he said.
A reader asked us if the United States is the "mostly highly taxed nation in the world," so we decided to check it out. Trump’s press office did not respond to an inquiry.
We should note that a more specific claim would have been largely accurate. We have given a Mostly True rating to the claim that the United States has the highest corporate tax rate in the world. (The statutory corporate tax rate ranks as the world's highest, but widespread deductions and exclusions tend to lower the effective rate below the comparative level for other countries.)
But Trump's comment doesn't cite the corporate tax rate, and he seemed to be discussing overall tax rates when he said the United States is "the most highly taxed nation in the world."
When we asked tax experts what they thought was the best yardstick for comparing different countries, they pointed to two possible criteria. One was tax revenue as a percentage of gross domestic product. The other was tax revenue per capita. Both measures are calculated by the Organization for Economic Cooperation and Development, a group of 34 advanced industrialized nations.
We found that for both measurements, many of the United States’ industrialized peers had higher levels of taxation in 2013, the most recent year for which data is available.
Taxes accounted for about 25 percent of the United States’ gross domestic product -- but if that sounds like a lot, it was only enough to rank the United States 27th out of 30 countries studied. The five with the highest percentages were Denmark, France, Belgium, Finland and Sweden, each of them with taxation accounting for more than 42 percent of gross domestic product. Only South Korea, Chile and Mexico had lower levels of taxation per GDP than the United States.
When looking at tax revenue per capita, the United States ranks somewhat higher, but still far from the top.
Taxes per capita in the United States totaled $13,482, according to the OECD data. That ranked 16th out of 29 countries for which data was available for 2013. The five with the highest per-capita amounts were Luxembourg, Norway, Denmark, Sweden and Switzerland, with amounts ranging from $23,000 to $48,000. Eleven countries had per-capita amounts less than $10,000, including Hungary, Chile and Turkey, the bottom three on the list.
While it probably makes the most sense to compare the United States to other advanced, industrialized nations, there is one additional data source that includes the full roster of countries -- the World Bank. In the World Bank’s comparison of 115 countries for 2012, the U.S. ranked 12th from the bottom in taxation as a percentage of GDP. Among the countries with lower percentages were two OECD members (Japan and Spain), some wealthy oil-producing nations (Oman and Kuwait) and handful of very poor countries (including Afghanistan and the Central African Republic).
Bottom line: Trump is wrong by all the data sets we looked at.
Trump said the United States is "the most highly taxed nation in the world." Depending on the measurement you use, the United States is either in the middle of the pack or on the lighter end of taxation when compared to other advanced industrialized nations. We rate his claim False.
Washington Times, "Donald Trump: Hedge fund workers aren’t paying enough in taxes," Aug. 24, 2015
Organization for Economic Cooperation and Development, revenue statistics comparative tables, accessed Aug. 27, 2015
World Bank, tax revenue as a percentage of GDP, accessed Aug. 27, 2015
Email interview with Eric Toder, co-director of the Urban Institute-Brookings Institution Tax Policy Center, Aug. 27, 2015
Email interview with Richard Borean, spokesman for the Tax Foundation, Aug. 27, 2015
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