Director Keith Hall Warns: “We Might Take A Hit” On GDP, Wage Growth, And Business Investment If Corporate Rate Is Raised
At the House Budget Committee’s first public hearing of 2019, the nonpartisan CBO issued an important warning: “Raising the corporate income tax rate…could slow down economic growth and wage increases.”
Congressional Budget Office Director Keith Hall said raising the corporate income tax rate…could slow down economic growth and wage increases.
He also said during a House Budget Committee hearing that it’s not clear that raising the tax above the current 21 percent rate would produce deficit savings.
“We might take a hit on [gross domestic product], we might take a hit actually on wage growth a little bit,” Hall said, responding to a question from Steve Womack of Arkansas, ranking Republican on the committee. Womack had asked what would happen if the tax were raised from 21 percent to 28 percent, as Budget Chairman John Yarmuth has suggested.
Hall said raising the tax would likely reduce business investment.
The historic results generated by historic tax reform only underscore the importance of the CBO’s new warning:
- A whopping 2.6 million new jobs have been created since the passage of the Tax Cuts and Job Act.
- The estimated growth rate for 2018 would be the fastest annual pace in over a decade.
- “The number of Americans filing jobless claims fell to the lowest in close to 50 years.”
- In 2018, wages grew by 3.2%, “the biggest increase since 2009 and a full 1.2% higher than inflation,” which means that “workers – after three and a half decades of essentially flat wages – are finally clawing back real added income.”
- Companies and cash are flowing back into the United States from overseas.
- Our country’s economy reclaimed its spot as the world’s most competitive.
- The unemployment rate recently “rose to 3.9% from a 49-year low of 3.7%, largely because more people entered the workforce in search of jobs.”
- Utility bills continue to shrink for Americans in all fifty states.
- Optimism among small-business owners, manufacturers, and consumers hit or hovered near record highs following the enactment of tax reform.