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Donald Trump on taxes: CNN's Reality Check team vets the claims
By CNN's Reality Check team, September 25, 2016
During his campaign, Donald Trump's made many claims about taxes. CNN's Reality Check Team put the billionaire's statements and assertions to the test.
The team of reporters, researchers and editors across CNN listened throughout the speech and selected key statements, rating them true; mostly true; true, but misleading; false; or it's complicated.
Reality Check: Trump on the average worker's tax burden
August 8, 2016
By Kate Grise, CNN
During a speech in Detroit on his economic policies, Donald Trump decried America's high income taxes.
"The average worker today pays 31.5% of their wages to income and payroll taxes," he said. "On top of that, state and local taxes consume another 10%."
Trump cites a report from the Tax Foundation, a conservative think tank, which itself cites 2014 data from the OECD. That data includes a worker's income tax, his payroll tax contributions and the payroll tax contributions that his employer make on his behalf.
On a state and local level, the Tax Foundation says that U.S. average state-local tax burden in 2012 was 9.9% of the state's income.
Trump cited the information accurately. But the data itself may present a skewed picture.
For one, the Tax Foundation's average worker is assumed to be a single worker without children making $50,000. But that's much higher than the median wage for the average worker with no children, which was about $32,000 in 2014, according to Census Bureau data. And the more you make, the more you pay in taxes.
For workers making median wages, their tax burden is likely to be lower, said Len Burman, director of the non-partisan Tax Policy Center. For instance, he noted a family of four with $75,845 in earnings in 2014 paid an average tax rate of 20.64%, including the employer portion of payroll taxes.
As for state and local taxes, the 10% represents the share of all income paid in taxes, not of the average worker's income. Nor do the calculations account for the fact that workers may deduct state and local income taxes on their federal return, thereby lowering their overall tax burden.
For those reasons, we rate Trump's claim as FALSE.
Reality Check: Trump says Hillary Clinton would tax the middle class
August 8, 2016
By Jeanne Sahadi, CNNMoney
Donald Trump asserted that Hillary Clinton is planning "another massive job-killing $1.3 trillion tax increase."
He went on to say that Clinton herself "accidentally told the truth and said she wanted to raise taxes on the middle class."
Trump's estimate for how much Clinton wants to raise taxes is just a little high -- independent analyses out it between $1.1 trillion and $1.2 trillion. Still, we rate this claim TRUE.
But those tax increases are largely targeted at the highest-income households. The nonpartisan Tax Policy Center notes that "Nearly all of the tax increases would fall on the top 1 percent; the bottom 95 percent of taxpayers would see little or no change in their taxes."
For this reason, we rate Trump's claim on Clinton and the middle class as FALSE.
Reality Check: Trump on business tax rate
August 8, 2016
By Kate Grise, CNN
In a speech to the Detroit Economic Club, Donald Trump slammed America's business taxes saying, "The United States also has the highest business tax rate among the industrialized nations of 35 percent. It's almost 40 percent when you add in taxes at the state level."
It is true that American businesses face the highest official corporate tax rate. The federal rate stands at 35%, and the average state and local tax rate is about 6%, according to the Organization for Economic Co-operation and Development.
But that's not what many companies actually pay. The Government Accountability Office found that large, profitable U.S. corporations paid an average effective federal tax rate of 12.6% in 2010 thanks to things such as tax credits, exemptions and offshore tax havens. In each year from 2006 to 2012, at least two-thirds of all active corporations had no federal income liability, according to the GAO.
U.S. corporate tax collection totaled 2.6% of GDP in 2014, according to the OECD. That was the 16th highest rate among the 34 nations.
So when it comes to American corporations, we rate Trump's statement as TRUE, BUT MISLEADING. The United States has the highest official corporate tax rate, but that's not what many companies actually pay.
Reality Check: Trump on 'profound relief' for middle class
July 21, 2016
Eve Bower, CNN
Outlining his tax proposal, Trump said he would cut taxes more than any other candidate. In more specific terms, he said, "Middle-income Americans and businesses will experience profound relief."
The nonpartisan Tax Policy Center analyzed Trump's tax plan in detail. And while they found that middle-income earners would indeed see a cut in their tax bill, the wealthiest Americans would see a far more significant reduction.
According to the analysis, using 2015 dollars, households that earned $45,000 to $80,000 per year make up the middle fifth of American earners. For these families, Trump's tax plan would likely bring down their income taxes by an average $2,700 per year. This is about 4.9% of their after-tax income.
But the top 1% of U.S. households would see an average tax cut more than 100 times that size.
The study found these households would see a reduction of their tax burden of an average of more than $275,000, or 17.5% of their after-tax income.
Because a $2,700 tax cut would be significant for many middle class families, we rate Trump's claim true, but because his speech failed to mention the fact that wealthy Americans would benefit so much more, we also rate his claim misleading.
Reality Check: Trump on American taxes
June 22, 2016
By Kate Grise and Tami Luhby, CNN
"We are, by the way, the highest taxed nation in the world. Please remember that," Trump said.
As CNN's Reality Check team did when Trump made this claim in the past, we'll look at each part of his claim that American individuals and businesses pay more taxes than any other country.
Do Americans really pay more individual taxes than citizens of any other country in the world?
Hardly.
America ranked 16th out of the 34 Organization for Economic Co-Operation and Development member countries for average rate of income tax and employees' social security contributions. In America, that rate is 25.6%. In Belgium, the country with the highest average rate of income tax and employees' social security contributions, citizens pay 42%. Germany, Denmark, Austria and Hungary round out the top five countries with the highest average rate of income tax and employees' social security contributions.
OECD's 34 member countries are advanced, industrialized nations, which makes their data valuable in comparing the United States to similar countries. China, Russia and India are not included in the OECD's list because they are not member countries.
We can also look at total tax revenue as a percentage of the country's gross domestic product. This time, America ranks even lower: 27th out of 34 OECD member countries in 2014. America's tax revenue is 26% of the country's GDP. Denmark tops the list with its tax revenue being equal to 50% of the country's GDP.
Looking at whether American citizens face the highest taxes, we rate Trump's claim as false.
Turning to companies, it's true that American businesses face the highest official corporate tax rate. The federal rate stands at 35%.
But that's not what many companies actually pay. The Government Accountability Office found that large, profitable U.S. corporations paid an average effective federal tax rate of 12.6% in 2010 thanks to things such as tax credits, exemptions and offshore tax havens. In each year from 2006 to 2012, at least two-thirds of all active corporations had no federal income liability, according to the GAO.
U.S. corporate tax collection totaled 2.6% of GDP in 2014, according to the OECD. That was the 16th highest rate among the 34 nations.
So when it comes to American corporations, we rate Trump's statement as true, but misleading. The United States has the highest official corporate tax rate, but that's not what many companies actually pay.
Reality Check: Trump on spending cuts
March 3, 2016
By Tami Luhby, CNNMoney
Trump has said the country can afford his tax cuts, which will add trillions to the nation's deficit, because he will cut waste, fraud and abuse. Asked during the debate in Detroit for specifics, he cited cutting down the Department of Education and the Environmental Protection Agency, as well as squeezing better discounts out of drug companies.
"Department of Education. We're cutting Common Core. We're getting rid of Common Core. We're bringing education locally. Department of Environmental Protection. We are going to get rid of it in almost every form ... Because of the fact that the pharmaceutical companies are not mandated to bid properly, they have hundreds of billions of dollars in waste," Trump said.
CNNMoney looked at this in January. It found that even if Trump cut the EPA and Education Department entirely, it would save less than 3% of the $3.7 trillion the federal government spent in the past year. The nation spent $90 billion on education and $7 billion on the EPA.
As for saving hundreds of billions from negotiating with pharmaceutical companies, that would be hard to do since Medicare is estimated to have spent $77 billion on drugs in 2015, according to the Congressional Budget Office. Total spending on drugs, which includes outlays by private insurers, was just under $300 billion in total in 2014, federal National Health Expenditures data.
Can Trump make up for his tax cuts by cutting two federal agencies and negotiating with drug companies? Our verdict: FALSE.
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