×

Trump's tax numbers just don't add up

Donald Trump didn't mention taxes that much in his acceptance speech of the GOP presidential nomination, but his assertion that Americans pay among the highest taxes in the world is not accurate.

That's according to the nonpartisan Committee for a Responsible Federal Budget and others.

"As a share of the economy, the United States is nowhere close to the 'highest-taxed country in the world' and does not raise nearly as much tax revenue as other developed countries, many of which are in Europe," the group said in a blog post Friday.

Using that measure, U.S. tax revenues amounted to about 26 percent of gross domestic product, according to 2014 figures from the Organization for Economic Cooperation and Development. That's well below the OECD average of 34 percent for developed countries.

Measured another way, the total tax revenue raised in the U.S. in 2014 worked out to $14,203.91 per person. That's well below the OECD average of $15,950.28.

The Trump campaign did not immediately reply to a CNBC request for comment.

In his acceptance speech, Trump repeated his pledge that if elected he would initiate "the largest tax reduction of any candidate who has run for president this year — Democrat or Republican."

"America is one of the highest-taxed nations in the world," he said. "Reducing taxes will cause new companies and new jobs to come roaring back into our country."

It's true that the statutory tax rates for corporations are higher than most countries. But that official rate doesn't reflect the effective rate that companies pay after taking advantage of tax deductions and other loopholes

"Although the U.S. statutory tax rate is higher, the average effective rate is about the same, and the marginal rate on new investment is only slightly higher," according to a 2014 report from the Congressional Research Service.

The CRS noted that cutting the top corporate tax rate from 35 percent to 25 percent would give a short-term boost the economy, but only by less than two-tenths of 1 percent of total output. Such a cut would also be expensive, leaving a hole in the federal budget of $1.2 trillion to $1.5 trillion over the next 10 years, the CRS reported.

Earlier in the campaign, Trump proposed making up lost revenues from tax cuts on individuals and corporations by taxing the huge pile of offshore corporate profits on the books of American companies seeking to avoid paying U.S. taxes.

But Trump's numbers don't add up, according to an analysis by the conservative Tax Foundation. Even after factoring in the potential economic growth that might come from lower taxes, the group's recent analysis estimated a $10 trillion budget shortfall over 10 years from Trump's plan.

Without massive spending cuts, that shortfall would likely have to be paid for with borrowing, further raising the mounting pile of Treasury debt outstanding. The added interest on that debt would further add to the budget shortfall, the Tax Foundation analysis found.