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Trump's Hassett spanks the Tax Policy Center

Lawrence Kudlow on

Sighting numerous peer-reviewed papers, Hassett reminded his audience of a plain truth: Taxes matter. They impact the economy.

"Economists who have studied the effects of taxes over time have discovered a consensus," he said. "Lower marginal tax rates and a broader base increase the rate of economic growth and well-being." (Italics mine.)

He continues: "For years, TPC analyzed tax bills without providing dynamic scoring, but now provides a dynamic score, but with zero effect."

For me, Hassett's biggest contribution to the tax debate is the notion that high corporate tax rates depress the wages of workers.

Because companies have stashed profits overseas, and because the U.S. tax cost of investment is so high, middle-income wage earners have suffered mightily. Hassett -- and his AEI colleague Aparna Mathur -- have argued for over a decade that if you want to raise wages, cut corporate tax rates.

During his TPC speech, Hassett noted that "for the median household in the U.S., the top corporate marginal rate cut from 35 percent to 20 percent would boost wage growth almost four-fold."

 

In his past work, Hassett has argued that 70 percent of the benefits of lower business tax rates accrue to middle-income wage earners -- in other words, Donald Trump's middle-class base.

Trump's tax cuts are not handouts to the rich, as the redistributionist Democratic left argues. Everyone benefits from these lower tax rates. As JFK put it, a rising tide lifts all boats. The growth ignited by lower tax rates solves all problems.

Class warfare has never worked in American politics. But Trump's tax plan will help middle-income wage earners the most. There's nothing wrong with that.

Backing up Hassett's assertions, former CEA chair Glenn Hubbard recently wrote in the Wall Street Journal that too many economists fail to consider the share of the U.S. corporate tax burden borne by labor -- 60 percent according to his research. Neither the TPC, the Congressional Budget Office, nor the Joint Tax Committee model these results. Instead, they ignore the evidence.

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