Fact-Check: GOP Candidates On Taxes And Downgrades
Everyone knows the GOP is the party of small government and low taxes. At Saturday night's debate, the 2016 Republican presidential candidates sparred over who had the best fiscal conservatism cred.
We decided to look at how well candidates told the truth on a few of these claims in our latest debate fact-check.
"After New Jersey raised taxes on millionaires, we lost, in the next four years, $70 billion in wealth [that] left our state." — New Jersey Gov. Chris Christie
It's not that simple.
He seems to be talking about New Jersey's so-called millionaire's tax that was instituted in 2004 — well before Christie took office — upping the tax rates of high-income people. Christie's number most likely comes from a 2010 study from Boston College that found an outflow of $70 billion in wealth from the state between 2004 and 2008. (Christie vetoed another "millionaire's tax" last year before announcing his candidacy.)
But as is usually the case with economic causes and effects, things are more complicated than that. For one thing, the study's author later cautioned that taxes were "just one possibility" for wealth fleeing the state, as he told NJ.com. And another 2011 study, from researchers at Stanford and Princeton, found that "the policy effect [of the tax increase] is close to zero" in terms of driving millionaires out of the state, as the Wall Street Journal reported.
So Christie is using a number that represents his position well, but there's context and other evidence he is not mentioning here.
"Under Chris Christie's governorship of New Jersey, they've been downgraded nine times in their credit rating." — Florida Sen. Marco Rubio
That's true, but Christie may not be totally to blame.
Rubio is referring to credit rating agencies' grades that they assign to states. These ratings are considered measures of states' financial and economic well-being.
Three agencies tend to get the most attention: Fitch, Moody's, and Standard & Poor's. So to be clear, it wasn't that one agency downgraded New Jersey nine times. Rather, those three agencies did it three times each.
For all of the candidates who have served as governors, NPR looked into their states' credit rating records last year and found that Christie's New Jersey had the worst record of all.
Sometimes when a rating agency downgrades a state, it does mention a governor specifically. In a downgrade in 2014, for example, S&P called Christie out for delaying pension payments.
But it's not all in governors' hands. Rating agencies are trying to take "a fairly long-term view" in estimating a state's fiscal health, as Don Boyd, director of fiscal studies at the Rockefeller Institute, explained to NPR last year. That view extends beyond even when the current governor is in office. Not only that, but governors can't really directly control a state's economy, he added.
(Interestingly, two governors who did pretty well on this measure — former Texas Gov. Rick Perry and former Louisiana Gov. Bobby Jindal — are no longer in the presidential race.)
"Right now, we're the highest-taxed country in the world." — Donald Trump
That's not true.
When it comes to individual income tax rates, the U.S. is about middle of the pack among its peers. As of 2014, the U.S. had the 18th-highest top statutory individual tax rate out of 34 countries, according to the OECD, a group of mostly advanced economies.
And when it comes to total tax revenue, the U.S. is close to the back of that pack. U.S. tax revenue in 2014 equaled 26 percent of its GDP in 2014. The OECD average share that year, by comparison, was 34.4, and at the opposite end of the spectrum, Denmark's figure is nearly 51 percent — a far cry from U.S. revenues.
But then, Trump did go on to mention corporate taxes in his next few sentences. And if he was trying to refer to corporate tax rates, he's much closer to correct. In 2015, the Tax Foundation, a right-leaning tax policy think tank, found that the U.S. had the third-highest corporate tax rate in the entire world, behind Chad and the United Arab Emirates.
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