Trump: Tax plan will help cre­ate a wind­fall

Says tap­ping over­seas prof­its means big­ger pay­checks for work­ers

USA TODAY International Edition - - MONEY - Herb Jack­son USA TO­DAY Net­work

The White House is con­vinced that a spe­cial tax break it plans to of­fer to en­tice cor­po­ra­tions to bring back some of the es­ti­mated $2.6 tril­lion in prof­its they have shel­tered in over­seas tax havens will raise pay­checks for av­er­age Amer­i­can work­ers.

To hear the ad­min­is­tra­tion tell it, cor­po­ra­tions will in­vest that money in ex­pand­ing plants and re­search in the U.S., hir­ing work­ers and driv­ing up wages.

Pres­i­dent Trump flew to Mid­dle­town, Pa., on Wed­nes­day to speak to a crowd — many of them truck driv­ers — about his plan to repa­tri­ate cor­po­rate prof­its to the U.S. and the eco­nomic ben­e­fits it will cre­ate for them.

“We’ll be bring­ing back prob­a­bly very close to 100% of the money back into our coun­try where it can be put to work, and jobs will be cre­ated,” Trump said. “My Coun­cil of Eco­nomic Ad­vis­ers es­ti­mates that this change, along with a lower tax rate, will likely give the typ­i­cal Amer­i­can house­hold a $4,000 pay raise.”

For that to hap­pen, cor­po­ra­tions would have to de­cide to bring back their prof­its, in­vest them in ways that in­crease pro­duc­tiv­ity and boost the wages of work­ers. And that is far from guar­an­teed, economists say.

Kevin Has­sett, chair­man of the coun­cil, told a fo­rum in Washington on Wed­nes­day cor­po­rate profit growth used to be closely as­so­ci­ated with wage in­creases for work­ers, but it no longer is. He blamed tax havens such as Ire­land, where the cor­po­rate rate is as low as 2.4%.

But some economists, while agree­ing on the need to re­vamp the cor­po­rate tax code, say the big­gest ben­e­fi­cia­ries of lower rates will be ex­ec­u­tives and share­hold­ers. They say work­ers on av­er­age would only get 20 to 25 cents from each dol­lar in re­duced tax and would ben­e­fit more from pro­grams that lower the taxes they pay di­rectly.

There is wide­spread agree­ment the tax code needs to be over­hauled be­cause com­pa­nies have been able to keep money in for­eign sub­sidiaries to avoid taxes that might oth­er­wise be due.

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