Rather than achieving the $4,000 to $9,000 annual wage increase that Republicans anticipated, last year’s tax bill is on track to increase American wages an average of only $323, according to a recent analysis.
During the three months following passage of the tax bill, the average American saw a $6.21 increase in average weekly earnings. Assuming 12 weeks of work during the three months following passage of the corporate tax cuts, this equates to a $75 increase.
Assuming a full 52 weeks of work, the $6.21 increase in weekly earnings would result in a $323 annual increase, nowhere near the minimum $4,000 promised and $9,000 potential annual increases projected by President Trump and Speaker Ryan if significant cuts were made to corporate tax rates.
A massive shift would need to occur for the numbers to reach anything close to projections made by President Donald Trump and House Speaker Paul Ryan, yet those projections were central to their justification for lowering taxes on corporations and the wealthy.
From a document titled, “Corporate Tax Reform and Wages: Theory and Evidence,” on the White House’s website:
“Reducing the statutory federal corporate tax rate from 35 to 20 percent would, the analysis below suggests, increase average household income in the United States by, very conservatively, $4,000 annually.”
“When we use the more optimistic estimates from the literature, wage boosts are over $9,000 for the average U.S. household.”
Apart from one-time bonuses and a handful of companies vowing to raise wages, the tax bill has done little to ensure companies use their tax savings to the direct benefit of American workers.
Far more corporate tax savings have gone to stock buybacks than employees:
For the period December 2017 through February 2018, share buybacks more than doubled to $200 million.