Fact
President Trump announced his tax plan on Sept . 27 in Indianapolis . We fact checked his address . ( Meg Kelly / The Washington Post ) President Trump ’ s speech on the administration ’ s still - somewhat - vague tax plan   delivered in Indianapolis on Sept . 27   was filled with many of his favorite   inaccurate claims . For instance   he repeatedly says he is offering the “ largest tax cut in our country ’ s history  ” a dubious claim when properly measured as a percentage of the nation ’ s gross domestic product . Here ’ s a sampling of other inaccurate claims — and one case in which he appears to have adjusted his language because of our previous fact checks . “ To protect millions of small businesses and the American farmer   we are finally ending the crushing   the horrible   the unfair estate tax   or as it is often referred to   the death tax .” The president ’ s suggestion that “ millions ” of small businesses and farms are affected by the estate tax is absurd . According to the nonpartisan Tax Policy Center   only about 5   500 estates in 2017 — out of nearly 3 million estates — would have to pay any taxes . About half of estates subject to the tax would pay an average tax of about 9 percent . That ’ s because for a married couple   about $ 11 million is exempt from taxation . Only 80 — that ’ s right   80 — taxable estates would be farms and small businesses . That ’ s a big change from the past . In 1977   139   000 estates had to pay the tax . In 2000   it was 52   000 . But Congress has kept raising the exemption and lowering the tax rate . So for virtually all Americans   even farms and small businesses   the estate tax is just not a problem . “ Today   our total business tax rate is 60 percent higher than our average foreign competitor in the developed world .”  Trump  exaggerates here . The United States certainly has one of the highest statutory corporate tax rates in the world   currently pegged as high as 39 . 1 percent when including state taxes . ( The federal rate is 35 percent .)  Trump  says  it  is 60 percent higher than “ our average competitor in the developed world  ” comparing 39 . 1 percent to the average rate for the other members of the Organization for Economic Cooperation and Development   which is 25 . 5 percent when not weighted for GDP . ( It is 31 . 4 percent when weighted for GDP .) But the official rate does not necessarily tell the whole story . What also matters is the actual tax a company pays   after deductions and tax benefits . That is known as the effective tax rate   which can be calculated differently depending on the survey . According to the Congressional Research Service   the effective rate for the United States is 27 . 1 percent   compared with an effective GDP - weighted average of 27 . 7 percent for the OECD . “ 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  ” the CRS says . The Congressional Budget Office   when it examined the issue   said the U . S . effective tax rate was 18 . 6 percent   which it said was among the highest of the biggest economic powers   the Group of 20 . “ Americans waste so much money   billions and billions of dollars and many hours each year to comply with our ridiculously complex tax code . More than 90 percent of Americans use assistance to prepare their taxes .” Kudos to Trump for updating a formerly misleading phrase that “ more than 90 percent of Americans need professional help to do their own taxes .” This 90 percent figure refers to people who file taxes by hiring professionals or using tax software   such as Turbo Tax   which helps people file their taxes on their own . According to the National Taxpayer Advocate ’ s 2016 report   54 percent of individual taxpayers pay preparers and about 40 percent of individual taxpayers use software that costs about $ 50 or more . Still   it ’ s worth pointing out that there are more options now for people to easily file their taxes   using paid or free software . The Internal Revenue Service provides a Free File program   a public - private partnership that allows people with adjusted gross incomes of less than $ 64   000 to file their taxes using free software . Roughly 70 percent of American taxpayers are eligible for this free software   according to the Free File Alliance   which partners with the IRS for this program . In tax year 2016   the program made a new push to offer more software options that are free for taxpayers . “ A married couple won ’ t pay a dime in taxes on their first $ 24   000 of income . So a married couple   up to $ 24   000   can spend their money on their family   on their children   on what they have to do — so much better .” It ’ s debatable that this would be much better for a middle - class couple with children — and it could be worse . The tax plan would nearly double the standard deduction   $ 12   000 for individuals and $ 24   000 for married couples   but also eliminate personal and dependent exemptions ( currently $ 4   050 per family member ). So a couple with two children already “ don ’ t pay a dime ” on their first $ 28   800 . That ’ s because they get $ 12   600 in a standard deduction and $ 16   200 in dependent and personal exemptions . It ’ s possible Trump ’ s expanded child tax credit might help make up some of the difference   but maybe not . Lily Batchelder   a professor of public policy at New York University who was deputy director of the National Economic Council in 2014 - 2015   “ conservatively ” estimated in 2016 that “ Trump ’ s plan would increase taxes for about 8 . 7 million families  ” but the number could be as high as 11 million under “ reasonable assumptions .” That analysis was based on Trump ’ s campaign plan   which envisioned a larger increase in the standard deduction ($ 30   000 for a married couple ). “ The tax strategy that Ronald Reagan used to create an economic boom in the 1980s when our economy took off   the middle class thrived . And the family income of all families was increasing more and more   and it was a beautiful sight to behold .” This is a flip - flop . He was always a fierce critic of the bill   Reagan ’ s Tax Reform Act of 1986   which he now calls “ a beautiful sight to behold .” The law simplified tax brackets and eliminated tax shelters   and also lowered the top individual tax rate to 28 percent but raised the capital gains rate to the same level   giving them parity . In the years following the law    Trump  repeatedly blamed  it  for the savings and loan crisis   a decline in real estate investing and the 1990 - 1991 recession . “ This tax act was just an absolute catastrophe for  the country    for the real estate industry   and I really hope that something can be done  ”  Trump  told Congress in 1991 . In a television interview with Joan Rivers    he  said : “ What caused the savings and loan crisis was the 1986 tax law change . It took all of the incentives away from investors .”  Trump  also frequently attacked one of the Democratic sponsors of the bill   Sen . Bill Bradley ( D - N . J .)  including in a Wall Street Journal commentary in 1999 . Bradley ’ s last big idea to be enacted into legislation was also one of the worst ideas in recent history  ”  Trump  wrote   saying Bradley was responsible for the elimination of a tax shelter for real estate investments . (  He  said the good parts of the bill could be attributed to Reagan .) “ Indiana is a tremendous example of the prosperity that is unleashed when we cut taxes and set free the dreams of our citizens . … All of this is possible because the people of this state have made a decision … [ which ] included electing a governor who you may have heard of   who signed the largest income tax cut in the state ’ s history   our very   very terrific person and terrific vice president   Mike Pence .” This lacks context . As governor   Vice President Pence did make the largest income tax cut in Indiana ’ s history — but he didn ’ t have a very high bar to overcome   and it was a modest cut . Prior to Pence   there was only one time the income tax was cut without an offsetting increase   in the 1970s . Moreover   Indiana ’ s individual income - tax rate was already the second - lowest in the nation when Pence took office . Indiana ’ s individual income tax rate was 2 percent when it was established in 1964   then it was cut by 0 . 1 percent in 1979 . It rose to 3 percent in 1984   in response to revenue losses from the 1979 - 1982 recession   according to Purdue University economist Larry DeBoer . Then the rate increased to 3 . 4 percent in 1988   and remained that way until Pence cut it by 0 . 2 percentage points   to 3 . 2 percent . As governor   Pence established a record of cutting taxes . But according to the Indianapolis Star   state lawmakers raised taxes as soon as Pence left office . And compared to overall tax cuts in Indiana   Pence ’ s income tax cut is far from the largest tax cut in state history . “ I ’ m doing the right thing and it ’ s not good for me   believe me . … We are also repealing the alternative minimum tax   or AMT .” Trump ’ s claim that he would not benefit from the tax plan is not credible . Of course   he has not released his tax returns   so it is difficult to know for sure . But he is certainly subject to the AMT — and the one recent tax return that has been leaked   from 2005   shows that the AMT increased his tax bill from about $ 5 . 3 million to $ 36 . 5 million . So at least in that tax year   he potentially could have saved $ 31 million . Eliminating the estate tax   meanwhile   is likely to benefit his heirs . ( About our rating scale ) Send us facts to check by filling out this form Keep tabs on Trump ’ s promises with our Trump Promise Tracker Sign up for The Fact Checker weekly newsletter Share the Facts 2017 - 09 - 28 11 : 53 : 25 UTC Washington Post - 1 - 1 - 1 Washington Post Rating : False Washington Post Rating : https :// www . washingtonpost . com / video / politics / fact - check - president - trumps - tax - speech - in - indianapolis / 2017 / 09 / 28 / 44e8a3e8 - a3e1 - 11e7 - b573 - 8ec86cdfe1ed_video . html “ I ’ m doing the right thing and it ’ s not good for me   believe me . … We are also repealing the alternative minimum tax   or AMT .” Donald Trump President in a speech in Indianapolis Wednesday   September 27   2017 2017 - 09 - 27 Read More info Share the Facts 2017 - 09 - 28 11 : 55 : 24 UTC Washington Post - 1 - 1 - 1 Washington Post Rating : False Washington Post Rating : https :// www . washingtonpost . com / video / politics / fact - check - president - trumps - tax - speech - in - indianapolis / 2017 / 09 / 28 / 44e8a3e8 - a3e1 - 11e7 - b573 - 8ec86cdfe1ed_video . html “ To protect millions of small businesses and the American farmer   we are finally ending the crushing   the horrible   the unfair estate tax   or as it is often referred to   the death tax .” Donald Trump President in a speech in Indianapolis Wednesday   September 27   2017 2017 - 09 - 27 Read More info Share the Facts 2017 - 09 - 28 11 : 59 : 17 UTC Washington Post - 1 - 1 - 1 Washington Post Rating : Fishy math Washington Post Rating : https :// www . washingtonpost . com / video / politics / fact - check - president - trumps - tax - speech - in - indianapolis / 2017 / 09 / 28 / 44e8a3e8 - a3e1 - 11e7 - b573 - 8ec86cdfe1ed_video . html “ A married couple won ’ t pay a dime in taxes on their first $ 24   000 of income . So a married couple   up to $ 24   000   can spend their money on their family   on their children   on what they have to do — so much better .” Donald Trump President in a speech in Indianapolis Wednesday   September 27   2017 2017 - 09 - 27 Read More info
President Trump announced his tax plan on Sept . 27 in Indianapolis . We fact checked his address . ( Meg Kelly / The Washington Post ) President Trump ’ s speech on the administration ’ s still - somewhat - vague tax plan   delivered in Indianapolis on Sept . 27   was filled with many of his favorite   inaccurate claims . For instance   he repeatedly says he is offering the “ largest tax cut in our country ’ s history  ” a dubious claim when properly measured as a percentage of the nation ’ s gross domestic product . Here ’ s a sampling of other inaccurate claims — and one case in which he appears to have adjusted his language because of our previous fact checks . “ To protect millions of small businesses and the American farmer   we are finally ending the crushing   the horrible   the unfair estate tax   or as it is often referred to   the death tax .” The president ’ s suggestion that “ millions ” of small businesses and farms are affected by the estate tax is absurd . According to the nonpartisan Tax Policy Center   only about 5   500 estates in 2017 — out of nearly 3 million estates — would have to pay any taxes . About half of estates subject to the tax would pay an average tax of about 9 percent . That ’ s because for a married couple   about $ 11 million is exempt from taxation . Only 80 — that ’ s right   80 — taxable estates would be farms and small businesses . That ’ s a big change from the past . In 1977   139   000 estates had to pay the tax . In 2000   it was 52   000 . But Congress has kept raising the exemption and lowering the tax rate . So for virtually all Americans   even farms and small businesses   the estate tax is just not a problem . “ Today   our total business tax rate is 60 percent higher than our average foreign competitor in the developed world .”  Trump  exaggerates here . The United States certainly has one of the highest statutory corporate tax rates in the world   currently pegged as high as 39 . 1 percent when including state taxes . ( The federal rate is 35 percent .)  Trump  says  it  is 60 percent higher than “ our average competitor in the developed world  ” comparing 39 . 1 percent to the average rate for the other members of the Organization for Economic Cooperation and Development   which is 25 . 5 percent when not weighted for GDP . ( It is 31 . 4 percent when weighted for GDP .) But the official rate does not necessarily tell the whole story . What also matters is the actual tax a company pays   after deductions and tax benefits . That is known as the effective tax rate   which can be calculated differently depending on the survey . According to the Congressional Research Service   the effective rate for the United States is 27 . 1 percent   compared with an effective GDP - weighted average of 27 . 7 percent for the OECD . “ 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  ” the CRS says . The Congressional Budget Office   when it examined the issue   said the U . S . effective tax rate was 18 . 6 percent   which it said was among the highest of the biggest economic powers   the Group of 20 . “ Americans waste so much money   billions and billions of dollars and many hours each year to comply with our ridiculously complex tax code . More than 90 percent of Americans use assistance to prepare their taxes .” Kudos to Trump for updating a formerly misleading phrase that “ more than 90 percent of Americans need professional help to do their own taxes .” This 90 percent figure refers to people who file taxes by hiring professionals or using tax software   such as Turbo Tax   which helps people file their taxes on their own . According to the National Taxpayer Advocate ’ s 2016 report   54 percent of individual taxpayers pay preparers and about 40 percent of individual taxpayers use software that costs about $ 50 or more . Still   it ’ s worth pointing out that there are more options now for people to easily file their taxes   using paid or free software . The Internal Revenue Service provides a Free File program   a public - private partnership that allows people with adjusted gross incomes of less than $ 64   000 to file their taxes using free software . Roughly 70 percent of American taxpayers are eligible for this free software   according to the Free File Alliance   which partners with the IRS for this program . In tax year 2016   the program made a new push to offer more software options that are free for taxpayers . “ A married couple won ’ t pay a dime in taxes on their first $ 24   000 of income . So a married couple   up to $ 24   000   can spend their money on their family   on their children   on what they have to do — so much better .” It ’ s debatable that this would be much better for a middle - class couple with children — and it could be worse . The tax plan would nearly double the standard deduction   $ 12   000 for individuals and $ 24   000 for married couples   but also eliminate personal and dependent exemptions ( currently $ 4   050 per family member ). So a couple with two children already “ don ’ t pay a dime ” on their first $ 28   800 . That ’ s because they get $ 12   600 in a standard deduction and $ 16   200 in dependent and personal exemptions . It ’ s possible Trump ’ s expanded child tax credit might help make up some of the difference   but maybe not . Lily Batchelder   a professor of public policy at New York University who was deputy director of the National Economic Council in 2014 - 2015   “ conservatively ” estimated in 2016 that “ Trump ’ s plan would increase taxes for about 8 . 7 million families  ” but the number could be as high as 11 million under “ reasonable assumptions .” That analysis was based on Trump ’ s campaign plan   which envisioned a larger increase in the standard deduction ($ 30   000 for a married couple ). “ The tax strategy that Ronald Reagan used to create an economic boom in the 1980s when our economy took off   the middle class thrived . And the family income of all families was increasing more and more   and it was a beautiful sight to behold .” This is a flip - flop . He was always a fierce critic of the bill   Reagan ’ s Tax Reform Act of 1986   which he now calls “ a beautiful sight to behold .” The law simplified tax brackets and eliminated tax shelters   and also lowered the top individual tax rate to 28 percent but raised the capital gains rate to the same level   giving them parity . In the years following the law    Trump  repeatedly blamed  it  for the savings and loan crisis   a decline in real estate investing and the 1990 - 1991 recession . “ This tax act was just an absolute catastrophe for  the country    for the real estate industry   and I really hope that something can be done  ”  Trump  told Congress in 1991 . In a television interview with Joan Rivers    he  said : “ What caused the savings and loan crisis was the 1986 tax law change . It took all of the incentives away from investors .”  Trump  also frequently attacked one of the Democratic sponsors of the bill   Sen . Bill Bradley ( D - N . J .)  including in a Wall Street Journal commentary in 1999 . Bradley ’ s last big idea to be enacted into legislation was also one of the worst ideas in recent history  ”  Trump  wrote   saying Bradley was responsible for the elimination of a tax shelter for real estate investments . (  He  said the good parts of the bill could be attributed to Reagan .) “ Indiana is a tremendous example of the prosperity that is unleashed when we cut taxes and set free the dreams of our citizens . … All of this is possible because the people of this state have made a decision … [ which ] included electing a governor who you may have heard of   who signed the largest income tax cut in the state ’ s history   our very   very terrific person and terrific vice president   Mike Pence .” This lacks context . As governor   Vice President Pence did make the largest income tax cut in Indiana ’ s history — but he didn ’ t have a very high bar to overcome   and it was a modest cut . Prior to Pence   there was only one time the income tax was cut without an offsetting increase   in the 1970s . Moreover   Indiana ’ s individual income - tax rate was already the second - lowest in the nation when Pence took office . Indiana ’ s individual income tax rate was 2 percent when it was established in 1964   then it was cut by 0 . 1 percent in 1979 . It rose to 3 percent in 1984   in response to revenue losses from the 1979 - 1982 recession   according to Purdue University economist Larry DeBoer . Then the rate increased to 3 . 4 percent in 1988   and remained that way until Pence cut it by 0 . 2 percentage points   to 3 . 2 percent . As governor   Pence established a record of cutting taxes . But according to the Indianapolis Star   state lawmakers raised taxes as soon as Pence left office . And compared to overall tax cuts in Indiana   Pence ’ s income tax cut is far from the largest tax cut in state history . “ I ’ m doing the right thing and it ’ s not good for me   believe me . … We are also repealing the alternative minimum tax   or AMT .” Trump ’ s claim that he would not benefit from the tax plan is not credible . Of course   he has not released his tax returns   so it is difficult to know for sure . But he is certainly subject to the AMT — and the one recent tax return that has been leaked   from 2005   shows that the AMT increased his tax bill from about $ 5 . 3 million to $ 36 . 5 million . So at least in that tax year   he potentially could have saved $ 31 million . Eliminating the estate tax   meanwhile   is likely to benefit his heirs . ( About our rating scale ) Send us facts to check by filling out this form Keep tabs on Trump ’ s promises with our Trump Promise Tracker Sign up for The Fact Checker weekly newsletter Share the Facts 2017 - 09 - 28 11 : 53 : 25 UTC Washington Post - 1 - 1 - 1 Washington Post Rating : False Washington Post Rating : https :// www . washingtonpost . com / video / politics / fact - check - president - trumps - tax - speech - in - indianapolis / 2017 / 09 / 28 / 44e8a3e8 - a3e1 - 11e7 - b573 - 8ec86cdfe1ed_video . html “ I ’ m doing the right thing and it ’ s not good for me   believe me . … We are also repealing the alternative minimum tax   or AMT .” Donald Trump President in a speech in Indianapolis Wednesday   September 27   2017 2017 - 09 - 27 Read More info Share the Facts 2017 - 09 - 28 11 : 55 : 24 UTC Washington Post - 1 - 1 - 1 Washington Post Rating : False Washington Post Rating : https :// www . washingtonpost . com / video / politics / fact - check - president - trumps - tax - speech - in - indianapolis / 2017 / 09 / 28 / 44e8a3e8 - a3e1 - 11e7 - b573 - 8ec86cdfe1ed_video . html “ To protect millions of small businesses and the American farmer   we are finally ending the crushing   the horrible   the unfair estate tax   or as it is often referred to   the death tax .” [TGT] President in a speech in Indianapolis Wednesday   September 27   2017 2017 - 09 - 27 Read More info Share the Facts 2017 - 09 - 28 11 : 59 : 17 UTC Washington Post - 1 - 1 - 1 Washington Post Rating : Fishy math Washington Post Rating : https :// www . washingtonpost . com / video / politics / fact - check - president - trumps - tax - speech - in - indianapolis / 2017 / 09 / 28 / 44e8a3e8 - a3e1 - 11e7 - b573 - 8ec86cdfe1ed_video . html “ A married couple won ’ t pay a dime in taxes on their first $ 24   000 of income . So a married couple   up to $ 24   000   can spend their money on their family   on their children   on what they have to do — so much better .” [TGT] President in a speech in Indianapolis Wednesday   September 27   2017 2017 - 09 - 27 Read More info