Trump's touted $4,000 middle-class raise under the GOP tax plan is really $500 a year, highly speculative


President Trump flew to Harrisburg, Pennsylvania, on Wednesday evening to promote the emerging Republican tax plan as a big tax cut for the middle class, telling the gathered "truckers for tax reform" that "you're going to make more money, you're going to do better than ever before." Specifically, he said that a proposal to encourage U.S. companies to bring their foreign profits home "would likely give the typical American household a $4,000 pay raise" or more, citing the White House Council of Economic Advisers (CEA).
Trump was apparently referring to a "simple back-of-the-envelope calculation" from CEA chairman Kevin Hassett, who estimated in a speech last month that if U.S. firms didn't park their profits abroad, the jump in U.S. corporate profits would be passed on to workers, and over eight years, "the median U.S. household would get a $4,000 real income raise." If you make $50,000 a year, CNNMoney explains, Hassett's predicted 1 percent raise would be $500 a year, or $4,000 over eight years.
That's a big "if." Hassett "has a contrarian view from other economists and says that corporate tax cuts primarily help workers, not companies," The Washington Post notes. "I'd put myself down as a skeptic," Mark Mazur, a former tax policy chief at the U.S. Treasury and current head of the Tax Policy Center, tells CNNMoney, noting that corporate profits are already high and aren't broadly being shared with workers. Conservative economist Douglas Holtz-Eakin questioned how much money U.S. firms would repatriate.
The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
The Senate has a big vote on a budget next week that will determine if they can move forward with a partisan tax plan at all. Without details, it's hard to predict the effect of the GOP tax plan, but independent analyses suggest it would greatly benefit Trump and other very rich people and raise taxes on up to 30 percent of middle-income families.
A free daily email with the biggest news stories of the day – and the best features from TheWeek.com
Peter has worked as a news and culture writer and editor at The Week since the site's launch in 2008. He covers politics, world affairs, religion and cultural currents. His journalism career began as a copy editor at a financial newswire and has included editorial positions at The New York Times Magazine, Facts on File, and Oregon State University.
-
5 artfully drawn cartoons about Donald Trump's Epstein doodle
Cartoons Artists take on a mountainous legacy, creepy art, and more
-
Violent videos of Charlie Kirk’s death are renewing debate over online censorship
Talking Points Social media ‘promises unfiltered access, but without guarantees of truth and without protection from harm’
-
What led to Poland invoking NATO’s Article 4 and where could it lead?
TODAY'S BIG QUESTION After a Russian drone blitz, Warsaw’s rare move to invoke the important NATO statute has potentially moved Europe closer to continent-wide warfare
-
New York court tosses Trump's $500M fraud fine
Speed Read A divided appeals court threw out a hefty penalty against President Trump for fraudulently inflating his wealth
-
Trump said to seek government stake in Intel
Speed Read The president and Intel CEO Lip-Bu Tan reportedly discussed the proposal at a recent meeting
-
US to take 15% cut of AI chip sales to China
Speed Read Nvidia and AMD will pay the Trump administration 15% of their revenue from selling artificial intelligence chips to China
-
NFL gets ESPN stake in deal with Disney
Speed Read The deal gives the NFL a 10% stake in Disney's ESPN sports empire and gives ESPN ownership of NFL Network
-
Samsung to make Tesla chips in $16.5B deal
Speed Read Tesla has signed a deal to get its next-generation chips from Samsung
-
FCC greenlights $8B Paramount-Skydance merger
Speed Read The Federal Communications Commission will allow Paramount to merge with the Hollywood studio Skydance
-
Tesla reports plummeting profits
Speed Read The company may soon face more problems with the expiration of federal electric vehicle tax credits
-
Dollar faces historic slump as stocks hit new high
Speed Read While stocks have recovered post-Trump tariffs, the dollar has weakened more than 10% this year