White House: Tax cuts could create $1.2T boost
WASHINGTON (AP) — President Donald Trump’s top economist is doubling down on claims that corporate tax cuts would spark rapid economic growth and boost incomes.
Kevin Hassett, chairman of the White House Council of Economic Advisers, released a 41-page report on Friday detailing the possible benefits from the administration’s goal of slashing the corporate tax rate from 35 percent to 20 percent. The report estimates the reduced rates for businesses could increase the size of the U.S. economy by $700 billion to $1.2 trillion over a decade, while causing average household income to eventually surge by $4,000 annually.
Democratic lawmakers and many economists are doubtful that Trump’s tax cuts can deliver the boosts suggested by Hassett. They have said that Hassett cherry-picked his evidence and that most of the benefits from corporate tax cuts would go to wealthy investors rather than middle-class workers.
“This is their latest installment of trickle down fairy dust,” said Jared Bernstein, a senior fellow at the liberal Center on Budget and Policy Priorities and a former economics adviser in the Obama administration.
Hassett said in a phone call with reporters Friday that he’s “optimistic” that the possible economic growth generated from the plan will mean “it won’t significantly add to the deficit” and could be revenue neutral after 10 years. His argument is that lower corporate tax rates would lead to more investments by companies in equipment and workers, which would increase productivity and incomes.
The economic growth estimates are similar to what the conservative Tax Foundation says could happen from reducing business tax rates and allowing companies to fully expense their investments in equipment and buildings.
But an analysis released Friday by the nonpartisan Tax Policy Center estimates that the plan would reduce federal tax revenues by $2.4 trillion over the next decade.