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Donald Trump promised tax cuts to a cheering crowd in Henrico County during his first presidential campaign rally in Virginia on Oct. 14.
"Our taxes - we just put in a plan the other day - we’re going to reduce taxes tremendously because we have the highest tax rate anywhere in the world and our middle class is being absolutely destroyed," Trump said. "It’s being destroyed."
We wondered whether the U.S. really does have the world’s highest tax rate. We asked Trump’s campaign for clarification and evidence but didn’t hear back.
So we’ll evaluate Trump’s claim within the context of which he was speaking - of tax burdens affecting most people. That leads us to income taxes.
Income tax rates
The top income tax rate in the United States is 39.6 percent. That ranked 33rd highest on a list of the top rates in 116 nations compiled this year by KPMG, an international tax advisory corporation. Another survey - by tradingeconomics.com, a website that compiles economic data - ranks the U.S. top rate 38th highest among 155 nations and territories.
Chad and Ivory Coast had the highest top tax rates, at 60 percent.
The bottom income tax rate in the U.S. is 10 percent. Forty-one countries have higher bottom rates, according to data on 157 nations and territories compiled by Ernst & Young, an international accounting corporation.
There’s no precise way to compare middle income tax rates, because most nations don’t have systems as complicated as the seven-bracket tax scale used by the U.S.
Keep in mind that all of these figures concern statutory tax rates. Effective tax rates - the percentage actually paid on earned income after deductions - are lower. On average, Americans pay an effective income tax rate of 9.5 percent, according to research by the Tax Policy Center in Washington. We were unable to find a chart of the effective rates in other nations, which have their own rules for deductions and allowances.
Tax experts told us that focusing on tax rates - either statutory or effective - is not a meaningful way to compare the tax burdens of nations. The reason is that different countries place different emphasis on certain levies. For example, some nations with high income tax rates may have low payroll taxes and vice versa.
The experts suggested two different yardsticks for comparing tax burdens in different countries. 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.
PolitiFact National has 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 are available.
Taxes accounted for about 25 percent of the United States’ GDP -- placing the U.S. 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 were 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 with other advanced, industrialized nations, there is one additional data source that includes the full roster of countries. 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 a handful of very poor countries (including Afghanistan and the Central African Republic).
A final note: We should note that a more specific statement by Trump might have been largely accurate. PolitiFact has given a Mostly True rating to the claim that the U.S. has the highest corporate tax rate in world, although widespread deductions and exclusions tend to lower the effective corporate rate below the comparative level for some other countries.
But Trump didn’t mention corporations when he made his comment. He was lamenting economic problems facing the middle class.
Trump, while lamenting the condition of the middle class, said the U.S. has "the highest tax rate anywhere in the world."
All sets of data we examined for individual and family taxes prove him wrong. Statutory income tax rates in the U.S. fall around the end of the upper quarter of nations.
More exhaustive measures - which compute overall tax burden per person and as a percentage of GDP - show the U.S. either is in the middle of the pack or on the lighter end of taxation compared with other advanced industrialized nations.
We rate Trump’s claim False.
C-SPAN, Donald Trump speech in Henrico County, Va., Oct. 14, 2015. (Tax comment at 21:23 mark on tape).
PolitiFact, "Donald Trump says U.S. is `most highly taxed nation in the world,’ Aug. 28, 2015.
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
Interview with Roberton Williams, economist with the Urban Institute, Oct. 15, 2015.
Trading Economics, "List of countries by personal income tax rate," accessed Oct. 15, 2015.
Ernst & Young, "2015-15 Worldwide Personal Tax Guide," accessed Oct. 16, 2015.
Tax Policy Center, "Effective Federal Tax Rates, table T15-0049," June 23, 2015.
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