Former acting CBO Director Donald Marron on Tuesday said wages may not rise as much as the White House expects from lowering the corporate tax rate.
According to a White House study, slashing the corporate tax rate to 20% would increase the average household income by at least $4,000 a year.
“That is a very very large outside consensus view on what the potential would be from corporate tax cuts. Depending on how exactly you run the numbers, that would be like saying that if you cut corporate taxes by a dollar, people’s wages go up by $3 or $4. A much more kind of centrist mainstream estimate is that you know you got 20 cents, 30 cents on the dollar, so that number is way out there,” he told FOX Business’ Liz Claman on “Countdown to the Closing Bell.”
Dynamic scoring is one of the tools used by Congress to evaluate how tax policy changes will affect jobs, wages, investments, federal revenue and the size of the economy.
Marron is skeptical about the use of dynamic scoring when used by politicians.
“I’m definitely a fan of dynamic scoring done by professional careful folks who are trying to give Congress information about the implications of its policies. The challenge is when you get into the political rhetoric and folks start making bigger claims than the evidence would suggest are true,” Marron said.
Former CBO Director Doug Holtz-Eakin agrees with Marron that the use of dynamic scoring when done by politicians could be over exaggerated.
“There’s a big difference between dynamic scoring, which is a valuable tool and can be used very effectively, and wild claims often made by politicians, and I would take with a grain of salt the latter. We don’t really have a tax reform plan in its entirety. Who knows what the growth consequences will be,” he said.