President Trump’s corporate tax plan would put an extra $4,000 into the pockets of America’s working families, Kevin Hassett, chairman of the Council of Economic Advisors, told FOX Business.
Foreign countries with a low corporate tax rate see higher demand for jobs, according to Hassett.
“There’s a big literature that looks at how lots of other countries have done the same thing and how their wages responded and we take a very conservative edge to that literature, like the low-end estimates, applied the Trump tax plan to it, and it’s going to increase wages for American workers by about $4,000,” Hassett said to Stuart Varney on “Varney & Co.”
According to the Council of Economic Advisors, recent wage growth experience of the 10 lowest and highest taxed Organization for Economic Co-operation and Development (OECD) countries revealed an “extraordinary” difference between U.S. wages and the wages of lower-taxed countries.
“They are about 3% [higher] per year and so if you take even half of that growth difference… very quickly you get a pay difference that’s much bigger than $4,000 over time,” he said.
The president has proposed to reverse the current offshore model and lower the corporate tax rate to 15%, but in order for American workers to see extra income, Trump would need to drop the rate to 20% in Hassett’s opinion.
“Twenty percent is a really good rate. It would have a dramatic effect on America’s workers and that’s not just hypothesizing, it’s not ivory tower models, it’s hard facts, it’s data, it’s analysis,” he said.