Capitol Report: $4,000? Income boost from corporate tax cuts may be more like $500

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$4,000? Maybe more like $500.

The boost to incomes that the White House sees resulting from cutting the corporate tax rate may be only a fraction of what it is estimating.

President Donald Trump’s Council of Economic Advisers said in a study released Monday that cutting the corporate rate to 20% from 35% would “very conservatively” raise average household income by $4,000 a year. Workers would get the boost as companies invested, leading to higher productivity and wages, the CEA argument goes. Read the CEA study.

But at least one individual who’s cited in the study says it exaggerates his research, and another puts the benefit of cutting the corporate rate at $500.

In a series of tweets on Tuesday, Harvard Business School Prof. Mihir Desai said the CEA paper “misinterprets” a paper he did with two other authors.

“Cutting corporate taxes will help wages,” he writes in one tweet, “but exaggeration only serves to undercut the reasonableness of the core argument.”

Joe Rosenberg, a senior research associate at the Tax Policy Center, calculates that cutting the corporate rate to 20% would only reduce taxes by about $500 on average for middle-income Americans. That’s working off the assumption that middle-income taxpayers pay about 9% of the corporate income tax, he said.

See: White House report claiming $4,000 worker wage boost from corporate tax cuts called ‘trickle-down fairy dust.’

The White House, meanwhile, shows no signs of backing off on its estimate. CEA Chairman Kevin Hassett defended the $4,000 figure in a CNBC interview following the report’s release on Monday. And Trump’s re-election campaign is even using it in an email to supporters.