Cutting the corporate tax rate to 20 percent would boost U.S. economic growth by 3 to 5 percent over time, according to an analysis produced by President Donald Trump’s White House.
The analysis, released Friday by Trump’s Council of Economic Advisers, also repeats the panel’s finding that the corporate tax cut would increase average household income by at least $4,000. Other economists have questioned that claim.
Kevin Hassett, the chairman of the CEA, said Friday that some models show that it would take three to five years for the increase in GDP to take place. Other models show it could take twice that long, he said.
The paper appears to combine the effects of cutting the corporate rate, which is now 35 percent, with another proposal to allow companies to immediately write off the cost of certain capital investments. Under current law, such investments are written off over years through depreciation.
House Ways and Means Chairman Kevin Brady plans to introduce a tax bill on Wednesday. Hassett said he expects the bill may include details that could change the CEA’s analysis.
“I expect that as the complete plan is available, there will be changes to our analysis,” he said.
A Republican tax framework that the White House and Congress released on Sept. 27 calls for cutting tax rates on corporations, partnerships and limited liability companies. It would also consolidate the existing seven individual tax rates to three or four—with a decision on the highest tax bracket left up to congressional tax writers.