The GOP's tax cut hasn't delivered a pay bump yet. Defenders say: Just wait for it
By Tory Newmyer
August 15 at 8:14 AM
Be patient. That's the message from economists defending the Republican tax cut package against charges it has already failed on one of its core ambitions to boost wages.
The right-leaning Tax Foundation argues in a new report that the slashed corporate tax rate at the heart of the law will take years to yield a pay bump for workers. That’s because rather than sharing in the immediate windfall that shareholders and executives are seeing from stock buybacks and dividend payments, employees will only see their benefit fully realized once businesses complete a lengthy cycle of investment.
Even then, the think tank calculates, workers will collect a 1.5 percent wage gain over the long run — or a bump of $1,247 for a household earning $83,143 a year, the average income in 2016. That is a fraction of the $4,000 to $9,000 boost that Trump administration economists touted when they were selling the tax cuts last fall.
The analysis won’t cheer congressional Republicans who hoped to run for reelection on the tax cut, their only major legislative achievement. It also shouldn’t come as a surprise: GOP candidates running in special elections have stopped highlighting the issue after finding it falls flat with voters, and polls show its popularity has sagged.
But the argument that chopping the corporate tax rate by 40 percent will provide some lift to workers in the long run at least rests on notionally sound economics. And it rebuts the claim some critics are lodging that the early experience of the law proves only the wealthiest will benefit.
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Advocates on either side of the debate have argued the early performance of the tax package is enough to render a verdict on its impact for workers.
The New York Times editorial board over the weekend marshaled data from the first half of the year to lay out the case that the measure is little more than a giveaway to the rich. “The idea that the tax cuts were going to line workers’ pockets was always a mirage,” the paper wrote.
more:
http://www.washingtonpost.com/news/powerpost/paloma/the-finance-202/2018/08/15/the-finance-202-the-gop-s-tax-cut-hasn-t-delivered-a-pay-bump-yet-defenders-say-just-wait-for-it/5b7303641b326b4f9e90a738/?utm_term=.2cd4199208c4
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