daoleduc/Getty
While Kevin’s on vacation, we’ve invited other Mother Jones writers to contribute posts.
In an interview on Fox News last month, Treasury Secretary Steve Mnuchin made a sales pitch for the GOP’s tax reform plan—specifically, its plan to cut corporate taxes. “Most economists believe that over 70 percent of corporate taxes are paid for by the workers,” he said. His implication, in laymen’s terms: Regular workers would get 70 percent of the benefit of corporate tax cuts.
Five years ago, the Obama-era Treasury department found the exact opposite. A research paper on the topic concluded that corporate tax cuts would overwhelmingly benefit owners of capital, rather than workers. Those findings have been removed from the Treasury Department’s website, reported the Wall Street Journal late last week. Dozens of working papers on other topics, some dating back to 1974, are still available on the agency’s website.
The 2012 paper by the Office of Tax Analysis concluded that workers pay for only 18 percent of corporate taxes, meaning that they’d only get about 18 percent of the benefit of a tax cut. Owners of capital, on the other hand, pay for 82 percent, the paper found—meaning they would get the vast majority of the benefit from the GOP tax reform plan’s proposed corporate tax cuts. Under the current plan, the corporate tax rate would decrease from 35 percent to 20 percent.
A Treasury spokeswoman told the Wall Street Journal that “the paper was a dated staff analysis from the previous administration. It does not represent our current thinking and analysis.”
In 2012, the Congressional Budget Office came to a similar conclusion about corporate tax cuts. The CBO found that about 75 percent of the burden of corporate taxes are borne by owners, and only 25 percent by workers. In 2013, the nonpartisan Joint Committee on Taxation performed it own analysis, and came to the exact same conclusion as the CBO.
Back in August, Jared Bernstein, former Vice President Joe Biden’s ex-chief economist, predicted this flawed line of reasoning on corporate tax cuts from the Trump Treasury Department in a Washington Post op-ed. “If you’re not wealthy, and you hear team Trump/Mnuchin/Ryan/Brady trying to sell a corporate tax cut on the basis of how much it’s going to help you,” Bernstein wrote, “tell them [economist] Adam Smith told you they were full of it.”
