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I was listening to the Trump rally tonight in Ohio and Trump said:

My administration is working every single day to heed and honor the will of the voters. That includes working on one of the biggest tax cuts in American history and actually if I get what I want, it will be the single biggest tax cut in American history. We have the highest taxes anywhere in the world and this will really bring them down to one of the lowest.

USA has the highest taxes anywhere in the world

This sounds like a difficult claim to verify, does he mean corporate tax? Income tax? Is he factoring in VAT/GST? Don't they differ between states? Is he talking about federal taxes, or including state taxes? For which tax brackets?

Does the USA pay the highest taxes in the world?

Chris Hayes
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Coomie
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    See [Do US companies pay significantly less taxes than European ones (based on tax rates)?](https://skeptics.stackexchange.com/questions/2134/do-us-companies-pay-significantly-less-taxes-than-european-ones-based-on-tax-ra) – ff524 Jul 26 '17 at 02:03
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    Related: [Do rich companies pay little/no corporate income taxes in the United States?](https://skeptics.stackexchange.com/questions/2059/do-rich-companies-pay-little-no-corporate-income-taxes-in-the-united-states) – Nat Jul 26 '17 at 09:46
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    He's almost certainly referring to the corporate tax, which does indeed have one of the highest marginal rates in the world, though most corporations don't actually end up paying that full rate. – reirab Aug 04 '17 at 19:55
  • Lies, damn lies, statistics: Might the claim make sense when refering to *total federal tax volume*? For example 25% income tax from 320 million americans is a lot more than 40% income tax from 11 million belgians (I used population, not tax payers, but you get the idea). Of course, with that interpretation, the claim merely boils down to "we are one of the largest and productive nations" – Hagen von Eitzen Aug 05 '17 at 10:20

2 Answers2

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Mostly false.

According to Wikipedia, List of countries by tax rates, Belgium has the highest maximum income tax rate (64% tax), Cameroon has the highest corporate tax rate (38.5%) and Netherlands have the highest minimum income tax rate (36.55%).

Time.com reported in Jul 19, 2017:

As the Republicans in Washington prepare to dig into the coming round of budget negotiations, their top priorities will include an systemic overhaul for U.S. taxes, which President Trump has characterized as "just about the highest in the world."

But how much do Americans really pay compared with other nations? It may be less than you think.

Tax rate US compared with other countries

A research paper published this week by the Federal Reserve Bank of Chicago includes the above chart, highlighting the tax burdens of all 35 OECD countries as of 2014. With a tax burden of 25% -- a measurement that includes income, property, and various other taxes -- the U.S. is near the very bottom, well below the overall average of 34%. It ranks below all the measured countries except Korea, Chile, and Mexico.

Trump and other Republicans are right about one aspect of U.S. taxes, however. When it comes to taxing corporate profits, the U.S. does indeed have one of the highest nominal maximum rates in the world, at 35%.

The highest corporate tax rate is 38.5% (Cameroon) which is 3.5% higher than the US rate. But some states in the US have extra state based corporate tax of 1-12%.

The [US] marginal federal corporate income tax rate on the highest income bracket of corporations (currently above USD 18,333,333) is 35%. State and local governments may also impose income taxes ranging from 0% to 12%, the top marginal rates averaging approximately 7.5%. - Kpmg

So, US states that have local corporate tax above 3.5%, the rate is 38.5%+ and therefore higher than any other coutry in the world. But that doesn't apply to all state.

He would be right to say "some of our states have the highest corporate tax rates in the world."

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Sakib Arifin
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    Can you show why you think the top marginal rate is the figure Trump is referring to? – Oddthinking Jul 26 '17 at 08:38
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    @Oddthinking - can you show any reason to think he's referring to anything else? – PoloHoleSet Jul 26 '17 at 21:50
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    @PoloHoleSet: Yes, I can. The fact that it is wrong. The claim is vague in that it could be referring to a large number of different measures: top marginal income tax rate, mean income tax burden, median income tax burden, total income tax burden, mean/median/sum of the total (income + indirect) tax burden, etc. Given it is vague we need to give the claimant the benefit of the doubt. Picking one and declaring it wrong (or worse: accusing the claimant of deliberately lying, as this does) is cherry-picking. – Oddthinking Jul 27 '17 at 00:25
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    @Oddthinking I updated the answer with a chart that compares tax share of GDP – Sakib Arifin Jul 27 '17 at 00:42
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    @Oddthinking Trump probably doesn't know which one he is referring to. – DJClayworth Jul 27 '17 at 12:42
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    @DJClayworth - Doesn't really matter which one, since any one of them, except statutory corporate tax rate (which does not map to actual corporate tax rate, at all), is demonstrably false. – PoloHoleSet Jul 27 '17 at 13:53
  • Are there no state/province/local/etc. corporate taxes in Cameroon or any other high-tax countries that might be higher than the US+State? – Kevin Jul 31 '17 at 20:06
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    Huh. I wonder whether this graphic really shows us how much nations "really pay", seeing Italy so high, where tax evasion is endemic. – sgf Aug 05 '17 at 13:51
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It depends on which tax rate you are talking about and which countries you are including in the comparison.

The US does have the highest general top marginal corporate income tax rate in the OECD (a group of rich/developed countries), but worldwide it only has the third highest (after the United Arab Emirates and Puerto Rico). These can be further adjusted to use effective rather than merely nominal rates, but both of these measures are commonly used by economists and journalists, so it is unclear which one was being referred to in the speech.

On the other hand, according to Investopedia, the US has lower income tax rates than many other countries. For instance, the income tax rate for average-earning singles with no children in Belgium is 42%, 39.7% in Germany, 36.1% in Denmark, but only 25.6% in the US.

Jayson Virissimo
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    Which tax rate is Trump proposing to reduce? That should guide us into which one he meant. – Oddthinking Jul 26 '17 at 08:38
  • Information about Germany is not correct, and that makes all data from Investopedia completely unreliable. – Common Guy Jul 26 '17 at 09:45
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    Puerto Rico is part of the US. – jwodder Jul 26 '17 at 12:35
  • @CommonGuy what is the correct number for Germany? – Jayson Virissimo Jul 26 '17 at 16:07
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    It's also worth pointing out that while US corporate tax rates are nominally high, the tax code includes such a huge range of allowances and other factors that the actual tax paid is much lower. – DJClayworth Jul 26 '17 at 17:02
  • I don't know what is the correct number for a single person with average income and without children (I think it's about 20%), but if you pay 39% of your income as income tax, then your income is much-much higher than the average. – Common Guy Jul 26 '17 at 17:44
  • Comparing US income taxes to Denmark may not be apples to apples, since there's state taxes and sometimes local taxes (NYC is close to 10% afair). 39% effective income from all 3 taxes is quite common, which puts US back up with top rated ones. – user5341 Jul 27 '17 at 02:54
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    @Oddthinking Trump has repeatedly said that the US have the highest taxes in the world. If it happens once or twice, perhaps you can call it a slip of the tongue, but if he's doing it almost always, it indicates that either he really does mean *all* taxes (in which case he is either wrong or lying), or he only means corporate taxes (in which case he is either stupid for not remembering the difference or manipulative in the sense that he thinks by saying only taxes, he can create a false narrative amongst the dumb parts of the US population). – Imean H Jul 27 '17 at 06:36
  • @ImeanH: if you figure he means the total tax burden per capita, fine, but then you should downvote this answer for not addressing the question. – Oddthinking Jul 27 '17 at 07:33
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    People love lower taxes. That's the point he wants to sell. That's also the reason why he never talks about what exact tax, by what means, when and how. – BlueWizard Jul 27 '17 at 10:37
  • @user5341 "39% effective income from all 3 taxes is quite common" Umm... No. No, they are not. Most people aren't even in double digits for effective income tax rate, unless you're including social security and medicare taxes. Even then, the effective rate for middle-income families generally isn't over 15%, let alone 39%. To get 39% effective rate, you'd need to live in one of the most-taxed states and then be in a very, _very_ high income bracket. – reirab Aug 04 '17 at 20:03
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    Why does this answer say the United States is after Puerto Rico when Puerto Rico is part of the U.S.? That doesn't make any sense. You might as well say that the United States is also after New York, Massachusetts, and California. – reirab Aug 04 '17 at 20:05
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    @reirab - they are taxes, why wouldn't they be included? And yes, NYC taxes are presumably higher than Las Vegas – user5341 Aug 04 '17 at 23:04
  • @user5341 39% effective rate isn't even close to being common in _any_ state. Prior to the tax increases under Obama, it was barely even _possible_ in most of them. A family generally needs to have a six-figure income in order to even get to 10% effective rate from the FIT and SS + Medicare is another ~7%. You'd have to have half a million dollars of _taxable_ (i.e. after deductions and such) income to get close to 39% effective in any state and quite a lot more than that in most states. FIT effective rate is 'only' 34% at $1,000,000 taxable income. – reirab Aug 04 '17 at 23:43
  • It should be pointed out that the US does not have a national VAT tax, while many other 1st-world countries do. The VAT tax has an effect on corporate earnings similar to an income tax. – Daniel R Hicks Aug 06 '17 at 12:41
  • @BlueWizard *People love lower taxes* Citation needed. – gerrit Feb 08 '18 at 12:31