Washington, D.C. — Seth Hanlon, senior fellow at the Center for American Progress and former special assistant to the president for economic policy at the White House National Economic Council, released the following statement today after the Council of Economic Advisers (CEA) released a report claiming that corporate tax cuts would increase a typical household’s yearly income by $3,000 to $7,000.
Since the Trump-Congressional GOP tax plan is overwhelmingly slanted toward tax cuts for corporations and wealthy individuals, the only way that its proponents can argue that it helps the middle class is if the tax cuts trickle down to them. The CEA report cherry-picks findings from isolated studies while ignoring a vast body of economic literature on corporate taxes and wages, and as a result, its conclusions are absurd. Meanwhile, the mainstream consensus of economists is that labor—including both workers and executives—bears only a small percentage of the corporate tax, and then only in the long run. The CEA’s report implies that workers bear the entire corporate tax and then some; in fact, it implies that workers bear roughly 300 percent of the corporate tax or more.
There’s little reason to believe that tax cuts on corporate profits will trickle down to workers in the form of higher wages. After-tax corporate profits are hovering at all-time highs, but corporations are choosing to pay earnings out to shareholders rather than raising wages. In this environment, there is no reason to think that bigger after-tax corporate profits will mean bigger paychecks. We need policies that will boost workers’ bargaining power and help families directly—not more hollow trickle-down promises. In all, it is an unconvincing attempt to make the case that tax cuts for wealthy corporations will actually benefit the broader American people.
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