Trump Econ Adviser: Corporate Tax Cut Boosts Household Wages by Up to $7K Per Year

By NTK Staff | 10.16.2017 @8:42am
Trump Econ Adviser: Corporate Tax Cut Boosts Household Wages by Up to $7K Per Year

Council of Economic Advisers (CEA) Chairman Kevin Hassett believes a 15-point cut in the corporate tax rate will boost household wages by huge amounts.

If President Trump and Congress succeed in cutting the corporate tax rate from 35 percent to 20 percent, the average American household is in for a big raise.

That’s the conclusion of Kevin Hassett, the chairman of President Trump’s Council of Economic Advisers (CEA). According to The New York Times, Hassett’s Monday morning report on the tax cut argues the average household will see a boost of anywhere from $3,000 a year to $7,000 a year.

President Trump’s top economist argued in a report issued on Monday that corporate tax cuts being pushed by Republicans would increase a typical household’s income by between $3,000 and $7,000 a year, hinting at a primary argument the administration will make in drafting and selling its tax plan.

…The report draws heavily on several economic studies that find similar results to Mr. Hassett’s: that the so-called incidence of corporate taxation falls mainly on workers, meaning they have much to gain if such rates are cut. It concludes that if the corporate rate were cut to 20 percent, the median American household, which earns just under $60,000 a year, would earn between $3,000 and $7,000 more than it otherwise would have.

According to recent estimates of the average U.S. household income, this boost would represent a four- to nine-percent raise for American households.

This report builds on an estimate from President Trump last week that the corporate tax cut would lead to a “$4,000 pay raise” for “the typical American household.”

The major challenge for President Trump and Congress will be paying for such a cut. The Committee for a Responsible Federal Budget (CRFB) estimates the cut (with a repeal of the alternative minimum tax) will cost $1.9 trillion over 10 years. Options to pay for that $1.9 trillion include repealing deductions and exemptions.

President Trump spent part of his Monday morning tweeting about tax reform:

Sign Up

for NTK updates every week.