White House economic adviser Kevin Hassett issued a defense of President Trump’s $1.5 trillion tax cut on budgetary grounds Friday, arguing that the corporate side of the legislation pays for itself and that the individual tax cuts have bipartisan support.
Hassett noted at a tax policy conference that the corporate side of the overhaul is projected to cut revenue by about $300 billion over 10 years, which he argued was a modest amount for what it accomplished.
Prior to last year’s legislation, he said, “if we talked about a tax reform … just a pure corporate reform, that got the rate from 35 percent to 21 percent and only cost $300 billion over 10 years, you’d think that’s about revenue-neutral.”
The corporate tax reforms pay for themselves, when accounting for the likelihood that they generate faster economic growth that brings in new revenue for the Treasury, Hassett said.
Hassett, a Ph.D. economist who heads President Trump’s Council of Economic Advisers, said it’s unfair that opponents of the new law say that it will add to federal deficits via corporate tax cuts. That claim is “a little misleading,” he said, when much of the roughly $1.2 trillion in revenue losses on the individual side of the law come from provisions that have support from Democrats as well as Republicans, such as the larger child tax credit.
Democrats, however, also have criticized parts of the individual side of the reform that cut tax rates for high earners and provide breaks for businesses such as partnerships and sole proprietorships, the benefits of which are likely to flow largely to higher earners.
Hassett also described himself as worried about federal deficits and debt, even though in recent months Trump has signed a $1.5 trillion tax cut bill and a $320 billion two-year spending bill.
“Higher deficits are a concern,” he told the audience of tax experts at the Tax Council Policy Institute meeting.
Even so, he said, the president favored adding to the deficit to address the “raging problems” of a non-competitive tax code and insufficient defense spending.
