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These 2 simple charts destroy Trump's claim that lower corporate taxes increase wages

November 14, 2017

If you want to see how a policy will play out in the real world, you should first check to see if anyone has ever tried it before.

 

For instance, if you’re thinking about electing a reckless idiot president of the United States, you might want to dig deep into the history books to see how that’s worked out in the past.

 

So when Donald Trump and the rest of the GOP — who have the memories and morals of blowflies — talk about how a big corporate tax cut will raise average wages by $4,000, you shouldn’t take their word for it. You should check history.

 

And here’s the best part. You don’t need a bunch of ex-Goldman Sachs bankers whispering in your ear about abstruse concepts like dynamic scoring. You can just check Google! 

 

After all, if lower corporate tax rates led to higher wages, you should see a clear historical pattern demonstrating that very effect.

 

Well, let’s take a look.

 

Exhibit A: this chart, from the Center on Budget and Policy Priorities, which shows corporate tax revenue as a percentage of GDP:

 

 

As you can see, corporate tax revenue was once much higher when compared to the size of the economy as a whole. 

 

The CBPP explains it this way:

 

"Although the top U.S. statutory corporate tax rate is high by international standards, the average tax rate — that is, the share of profits that companies actually pay in U.S. taxes — is substantially lower because of the many deductions, credits, and other write-offs that corporations can take. U.S. corporate tax revenues are low compared to other developed countries as a share of the economy."

 

So if corporations’ effective tax burden began to plummet in the early ‘70s, you’d expect to see a massive increase in wages starting around the same time — or you would, anyway, if you bought into Republican logic.

 

Exhibit B: this chart, showing productivity growth vs. real wage growth since World War II:

 

 

As you can see (because in your case the B.S. isn’t stacked 10 feet above your own eyeballs), around 1973, as productivity continued its upward trajectory, wages began to flatline. 

 

So if wages stalled while productivity soared and corporations — by taking advantage of deductions and loopholes — paid lower and lower effective tax rates, where did all the money go?

 

The world may never know.

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