U.S. corporate tax cuts and wage growth
The U.S. Senate this week may well pass a large cut in the U.S. corporate tax rate. Supporters argue that reducing the rate to 20 percent from 35 percent will lead to large pay increases for typical workers. Opponents maintain that corporate shareholders, corporate chieftains, and the rest of the so-called C Suite will capture most of the gains in the form of dividends and buybacks, higher salaries, and greater nonsalary compensation such as stock options.
Economic research suggests that the trickle-down argument is overstated, and the more likely case is that the majority of the gains will accrue to investors, CEOs, and other highly compensated employees. Our infographic details the consequences of a corporate tax cut for investors, CEOs, and workers in both scenarios: the myth versus the likely reality.