In a speech on changing the tax code, President Trump offered some political spin on the facts.
• Trump claimed “anywhere from $3 trillion to $5 trillion” of profits are left overseas by U.S. companies to avoid U.S. taxes. But his own press office cites an estimate of $2.6 trillion in a fact sheet posted online the day of his speech. The group that published that number told us $5 trillion “seems impossibly high.”
• The president compared apples to oranges in saying the U.S. just had a 3% growth rate in gross domestic product — that’s for the quarter — while “on a yearly basis” under the Obama administration, growth “never hit 3%.” Quarterly GDP growth exceeded 3% eight times under President Obama.
• Trump said the U.S. was “dead last” in terms of business taxes. The U.S. has the highest statutory corporate tax rate among developed countries, but the rate isn’t the highest by other measures, such as when tax credits are included.
• Trump said that “more than 90% of Americans need professional help to do their own taxes” because the “tax code is so complicated.” Fifty-four percent paid someone else; another 40% used tax software.
Trump made his remarks on Aug. 30 in Springfield, Mo., calling on Congress to “support pro-American tax reform.”
Trump exaggerated the amount of money U.S. companies likely have in offshore accounts, nearly doubling a figure the White House includes in a fact sheet, released the same day as the president’s remarks.
Trump: “Because of our high tax rate and horrible, outdated, bureaucratic rules, large companies that do business overseas will often park their profits offshore to avoid paying a high United States tax if the money is brought back home. So they leave the money over there. The amount of money we’re talking about is anywhere from $3 trillion to $5 trillion. Can you believe that?”
U.S. companies with business overseas do keep some profits in offshore accounts, where it isn’t subject to U.S. corporate taxes until it is repatriated to this country. The profits are declared indefinitely, or permanently, reinvested, which means the companies say they will reinvest the money abroad.
If a U.S. company does bring the money back to the United States, it would be “subject to the U.S. tax rate of 35% minus a tax credit equal to whatever taxes the company paid to…