AP Photo/Evan Vucci

A sweeping tax overhaul signed by President Donald Trump pushed US rates to among the lowest in the world last year.

Just three of the 34 countries analyzed — Chile, Ireland, and Mexico — had lower tax burdens than the US last year.

In the year since the law took effect in January 2018, tax revenue declined even as economic growth picked up.

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A sweeping tax overhaul signed by President Donald Trump pushed US rates to among the lowest in the world last year, the Organization for Economic Cooperation and Development said Thursday.

The US posted a steeper drop in tax rates than any other OECD country in 2018, falling to 24.3% of gross domestic product from 26.8% a year earlier. That put it roughly 10 points below the organization's annual average rate.

Just three of the 34 countries analyzed — Chile, Ireland, and Mexico — had lower tax burdens than the US last year. The decline was driven by a $1.5 trillion tax-cut package Republicans passed in 2017, which was the largest in decades.

"Major reforms to personal and corporate taxes in the United States prompted a significant drop in tax revenues," the OECD said.

In the year since the law took effect in January 2018, tax revenue declined even as economic growth picked up. Corporate tax revenue fell by 0.7 percentage points, while personal income-tax revenue slipped 0.5 percentage points.

Along with increased government spending, that has lifted the US budget deficit to record highs. In July, the White House and Congress agreed to lift the debt ceiling and increase spending by approximately $320 billion. The gap between federal receipts and outlays is expected to surpass $1 trillion for the 2020 fiscal year.

Economists and policymakers have warned that the pace of deficit growth in the US is unsustainable and would undermine tools to fight a recession.

"Even with lower rates and even with decent growth, there is still going to be a need to reduce these deficits," Federal Reserve Chairman Jerome Powell told a congressional committee in November. "Frankly, if we don't do it, what happens is our children will wind up spending their tax dollars on interest rather than things they really need."

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OECD

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