Another new study released this week confirms that corporate tax reform alone will spur massive wage growth in the United States. The analysis, led by Boston University Professor Lawrence Kotlikoff, argues that "the new Republican tax plan raises GDP by 3 and 5 percent and real wages by between 4 and 7 percent. This translates into roughly $3,500 annually, on average, per working American household."
This confirms projections released yesterday by the Council of Economic Advisors (CEA), which also showed how cutting the corporate tax rate and bringing trillions of dollars in profits back home from overseas will boost wages for hardworking Americans. It also aligns with Lawrence Lindsey's assertion that "It would not be surprising to see real wage increases of 4% to 5%" if tax reform is enacted.
These studies directly contradict myths perpetrated by the Left that corporate tax reform benefits the wealthy at the expense of the middle class—a charge Speaker Ryan confronted head on during his address at The Heritage Foundation last week:
"Fixing the business side of our tax code is really all about helping families and workers. Cutting the corporate tax rate means more jobs here in the United States. It will foster increased competition, which will directly drive up wages for our workers. Higher wages means bigger paychecks. Bigger paychecks and lower tax rates means more money in your pocket. And more money in your pocket means a better standard of living."
Americans deserve a pay raise, and these reports show what middle-class families stand to gain before tax rate cuts. That is how we deliver on our promise to give hardworking Americans more jobs, fairer taxes, and bigger paychecks through pro-growth tax reform.