Monday, March 7, 2011

Mitt Romney Fact Check: U.S. employers pay highest taxes in the world

"Our employers pay the highest taxes in the world, tied with Japan," Mitt Romney said during a March 6, 2011 speech in New Hampshire. That's quite a statistic, but is it true?

It turns out that the Pulitzer Prize winning website has examined this very question before. In November of 2010, then Senator-elect Pat Toomey made a similar statement on NBC's "Meet the Press", albeit using slightly different words. "We should be lowering corporate tax rates because we have the highest in the world right now," he claimed. PolitiFact rated Toomey's statement to be Partly True, mostly based on his very specific use of the phrase "corporate tax rates".

The truthiness of Toomey's statistic actually varies depending on the kind of measurement you use. Among the 32 nations that form the Organization for Economic Cooperation and Development (OECD), the U.S. does have the highest statutory tax rate. However, statutory tax rates do not reflect what companies actually pay once bookkeepers go to work factoring in deductions and loopholes. That's why the statutory tax rate in the U.S. - 39.21% in 2010 - is far higher than the effective tax rate of 27.6%. Simply put, the U.S. does not rank #1 in the world when it comes to effective tax rates - the amount of taxes companies actually pay. 

Unlike Toomey, Mitt Romney specifically claimed that U.S. employers pay the world's highest taxes. He's way off. World Bank statistics show that the nation's effective tax rate of 27.6% is relatively low compared to that of nations like Palau (66%) or the Democratic Republic of Congo (58.9%).

Coming from the current favorite to win New Hampshire's first-in-the-nation Republican presidential primary in 2012, Romney's comments were obviously aimed at bringing President Barack Obama down a notch. In reality, he and the president actually agree on this particular issue.

"Over the years, a parade of lobbyists has rigged the tax code to benefit particular companies and industries," Obama said during his 2011 State of the Union Address. "Those with accountants or lawyers to work the system can end up paying no taxes at all. But all the rest are hit with one of the highest corporate tax rates in the world. It makes no sense, and it has to change."

Compare that to the following quote from Mitt Romney's March 6th speech in New Hampshire:

"Our employers pay the highest taxes in the world, tied with Japan. Even France and Italy have lower taxes than we do! And it’s our small companies that are particularly hard hit. We have to cut their taxes. At the same time, we need to say no to the corporate loopholes and special deals that reward influence and punish productivity."

A little bipartisan consensus as the early stages of the 2012 election get underway!

Article ©2011 David Anderson for New Hampshire Primary 2012. 

File:January 2008 Mitt Romney Campaign Rally.jpg

Photo of Mitt Romney from 2008 by Brian Rawson-Ketchum

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