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For Immediate Release
October, 25 2017, 09:15am EDT
Contact:
Phone: (202) 775-8810
Corporate Tax Cuts Will Not Increase Wages For Working Families
In a new paper, EPI Research Director Josh Bivens provides evidence that corporate tax cuts (like those included in the recent "Unified Framework" Republican tax plan) will not boost American wages, and demonstrates that claims to the contrary are based on faulty theory and evidence.
WASHINGTON
In a new paper, EPI Research Director Josh Bivens provides evidence that corporate tax cuts (like those included in the recent "Unified Framework" Republican tax plan) will not boost American wages, and demonstrates that claims to the contrary are based on faulty theory and evidence. Bivens looks specifically at a recent report released by the Trump administration's Council of Economic Advisers, which claims that their proposed tax cuts for large corporations will somehow trickle down to help American workers by boosting economy-wide productivity and wage growth, giving households an income increase of at least $4,000.
"The evidence is clear that lower corporate tax rates have not led to productivity-enhancing investments. Further, even if they did, productivity gains have largely not shown up in workers' paychecks in recent decades," said Bivens. "The Trump administration's claims that large wage gains for workers will result from cutting corporations' taxes is not supported by the professional research consensus on this issue, and have no serious backing in the data."
Bivens argues the claim that cutting corporate taxes will boost wages is false because:
- At the broadest level, there is no evidence linking corporate taxes and productivity or wage growth. Since World War II, productivity and wage growth in the U.S. economy were actually significantly faster in periods with higher corporate tax rates.
- A key reason for this lack of correlation between corporate tax rates, wages and productivity is the weak link between post-tax profit rates (which are boosted by tax cuts) and productivity-enhancing investment in the U.S. economy.
- In recent decades, even the link between economy-wide productivity growth and wage growth for the vast majority of American workers has been almost entirely severed. Thus, even if cutting corporate taxes did boost productivity, this would not be enough to boost typical workers' wages--productivity growth is a necessary, not a sufficient, condition for wage growth.
- The real key to boosting wage-growth for the American workers is shifting economic leverage and bargaining power away from capital owners and corporate managers to typical workers. Yet the Trump administration has consistently done the opposite.
EPI has highlighted a number of policies that would raise wages, and cutting corporate taxes is not one of them. If policymakers wanted to raise pay for working people, they could implement policies like raising the federal minimum wage, strengthening protections against wage theft, strengthening workers' abilities to join unions, and urging the Federal Reserve to pursue genuine full employment.
EPI is an independent, nonprofit think tank that researches the impact of economic trends and policies on working people in the United States. EPI's research helps policymakers, opinion leaders, advocates, journalists, and the public understand the bread-and-butter issues affecting ordinary Americans.
(202) 775-8810LATEST NEWS
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Six major medical organizations on Monday filed a lawsuit against Health and Human Services Secretary Robert F. Kennedy Jr. alleging he is putting American children at "grave and immediate risk" because of his policy on vaccines.
The plaintiffs in the lawsuit—including the American Academy of Pediatrics, the American College of Physicians, the American Public Health Association, the Infectious Diseases Society of America, the Massachusetts Public Health Association, and the Society for Maternal-Fetal Medicine—charged that Kennedy earlier this year made a "baseless and uninformed policy decision" when he removed vaccinations against Covid-19 from the Centers for Disease Control and Prevention's (CDC) official immunization schedule for "healthy" children and pregnant women.
The organizations emphasized that unless Kennedy's decision is reversed, "all children remain at grave and immediate risk of contracting a preventable disease" and further warned that it "exposes... vulnerable populations to a serious disease with potentially irreversible long-term effects and, in some cases, death."
The plaintiffs further charged that Kennedy's directive removing the Covid-19 vaccines from the immunization schedule was "but one example of the secretary's agenda to dismantle the longstanding... science- and evidence-based vaccine infrastructure that has prevented the deaths of untold millions of Americans."
The complaint then documented Kennedy's long history of statements and articles that have peddled false claims about the safety of vaccinations and pointed to his mass dismissals of staff at HHS and his appointment of likeminded vaccine critics to argue that "it has become clear that truth and transparency are not desired by the secretary, but rather he wishes subservient confirmation of his misinformation and lies."
Given this, the plaintiffs argued that Kennedy's decision to remove the Covid-19 vaccine from immunization schedules was "arbitrary and capricious" based on what they described as "vast and irrefutable evidence," including congressional testimony delivered by Kennedy in which he acknowledged that people shouldn't "be taking medical advice from me"; that Kennedy's directive directly contradicted an article published by the Food and Drug Administration days earlier stating that pregnancy was a condition that "increased a person's risk of severe Covid-19"; and that Kennedy did not identify specific recommendations from professional staff that he used as justification to restrict the availability of the vaccine.
Should courts find that Kennedy's decision was "arbitrary and capricious" as alleged by the plaintiffs, they would have the power to enjoin the policy under the Administrative Procedures Act, which was also employed recently to halt planned mass layoffs at HHS. The medical organizations urged courts to declare Kennedy's policy change "unlawful" and demanded "the restoration of the Covid vaccine recommendations for pregnant women and healthy children ages six months to 17 years" of age.
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The wealth tax approach, they wrote, "is effective because it targets all forms of tax optimization, whatever their nature. It is targeted, as it applies only to the wealthiest taxpayers, and only to those among them who engage in tax avoidance."
💡 "One of the most promising avenues is to introduce a minimum tax for the ultra-rich, expressed as a percentage of their wealth."Seven Nobel laureates in economics advocate for the Zucman tax in their latest op-ed.Read the full @lemonde.fr article 👇www.lemonde.fr/idees/articl...
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— EU Tax Observatory (@taxobservatory.bsky.social) July 7, 2025 at 8:05 AM
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