GOP tax plan
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 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.