In his acceptance speech at the Republican National Convention, Donald Trump painted a very bleak picture of a dystopian United States that is spinning out of control. Citing compelling statistics, the GOP nominee highlighted rising violent crime rates, wage stagnation, continuing unemployment, and the dangerous state of the world. And then, toward the end, Trump once again called the United States "one of the highest-taxed nations in the world."
Many of the numbers in Trump's speech were correct, including the rise in violent crime and police shootings, but his claim about taxes simply isn't. By almost any measure, the United States is nowhere near the top of the world in terms of taxes per GDP.
In 2014 the OECD reported that the average tax rate among OECD members was about 34 percent. The number for the United States is about 26 percent. This is actually lower than it was in 2000 (28.2 percent). For comparison, taxes as a percentage of GDP are 45 percent in France, 36 percent in Germany, and 33 percent in the United Kingdom.
The United States is fairly high-taxed compared with some of the larger economies outside the OECD, particularly the BRICS countries. Russia taxes less than 20 percent of GDP, India is at 18 percent, and China is at 22 percent. But even taking those economies into account isn't really enough to say that the United States is one of the highest-taxed nations in the world.
The United States does have one of the highest corporate tax rates in the world, at 39.6 percent (a combination of both federal and state rates). According to the Tax Foundation, only Chad and the United Arab Emirates are higher. A high corporate tax rate looks particularly bad because OECD nations have been moving away from relying on corporate levies. The United Kingdom and Japan have both slashed their corporate rates significantly in the last five years, leaving the United States as an outlier.
But the corporate tax has been declining in importance for years. It accounts for only about 11 percent of federal tax receipts. This is partly because of aggressive profit-shifting by corporations. However, the main reason is simply that more and more entities in the United States are organized as passthroughs. Passthroughs include businesses formed as partnerships, most LLCs, and S corporations. These entities are subject to the individual income tax.
Trump has actually massaged his claim about the United States' position in the world. He used to claim that it was the highest-taxed country. Now it has simply become one of the highest-taxed countries in the world. But either way, the Republican nominee is off. There are perfectly legitimate reasons to advocate cutting taxes, but the idea that the United States is more heavily taxed than its competitors and trading partners isn't one of them.