It’s doubtful, as CNN’s Jake Tapper explains, that average household income would increase $4,000 a year if the corporate income tax is cut from 35 percent to 20 percent.
That estimate comes from the White House Council of Economic Advisers, which doesn’t specify how President Donald Trump’s plan to cut corporate taxes would increase incomes by that much each year.
The CEA, in an Oct. 16 report, only says that a number of economic research papers “suggest” that the proposed rate reduction would change “average household income from $83,143 in 2016 to between $87,520 and $92,222, an increase of $4,000 to $9,000 in wage and salary income alone.”
But Mihir A. Desai, a professor of finance at Harvard University, and one of the economists cited in the CEA report, says his work doesn’t support such a conclusion at all. He told the New York Times that the actual income gain would be $800. It’s also important to note that any gain to workers would only come in the long term — over several years.
“I’m a believer in corporate tax reform, and I’m a believer in corporate tax cuts, and I believe they would go to workers,” he told the Times. “But I don’t believe those numbers add up.”