Tax Cuts to Boost GDP 3-5%: White House
President Donald Trump's Council of Economic Advisers (CEA) on Friday released the second in a series of reports on how proposed changes to the tax code could influence economic growth.
The CEA predicted that corporate tax cuts alone would produce GDP growth of between 3% and 5% in as little as three years. The cuts are part of the tax reform package currently being finalized in Congress and expected to be unveiled as a bill next week.
On a call with reporters Friday, CEA Chairman Kevin Hassett said he was optimistic that the Trump administration's current budget proposal, combined with corporate tax cuts, would create enough growth to make overall tax cuts revenue neutral once they were fully implemented into the economy.
Hassett acknowledged that CEA's models would likely be impacted by the results of ongoing negotiations on Capitol Hill to finalize the tax reform bill. Healso emphasized the dual importance of cutting the statutory corporate tax rate and easing the repatriation of funds U.S. companies hold overseas.
Hassett's predictions about corporate profits and wage growth have already come under scrutiny from some economists, who argue that the administration is drawing conclusions about growth that are not backed up by historical or empirical evidence.
Former Clinton administration Treasury Secretary Larry Summers recently wrote in a blog post that the Trump administration's predictions linking wage growth and corporate tax cuts are "some combination of dishonest, incompetent and absurd."