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FactCheck: have the Trump tax cuts led to lower unemployment and higher wages?

"Tax Cuts and Leprechauns (Wonkish)"

September 3, 2018 6.09 am AEST

Author Fabrizio Carmignani
Professor, Griffith Business School, Griffith University

Reviewer Saul Eslake
Vice-Chancellor’s Fellow, University of Tasmania

Disclosure statement

Fabrizio Carmignani has received funding from the Australian Research Council for a project on the estimation of the piecewise continuous linear model and its macroeconomic applications.

Saul Eslake does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

Partners - [inside]

The evidence on the ground is very clear. The Trump tax cuts have
led to stronger investment, stronger growth, lower unemployment
rate and higher wages.
– Minister for Finance Mathias Cormann, interview on RN Breakfast, August 13, 2018

After two years of debate and months of intense negotiation, the government’s proposal to cut the corporate tax rate from 30% to 25% for companies with turnover of more than A$50 million was voted down in the Senate.

But while the government’s attempts to pass tax cuts in Australia were not fruitful, tax reform remains a significant international issue.

In arguing for a tax reduction for big business, Minister for Finance Mathias Cormann pointed to economic outcomes in the United States, where corporate tax rates were cut from 35% to 21% in January this year.

“If you look at the economic data in the US in the second quarter, of course post the Trump tax cuts, the US is recording in excess of 4% growth on an annualised basis, the unemployment rate now has a ‘three’ in front of it, and wages growth is the strongest it’s been in a very long time,” Cormann said.

“Massive, massive capital investment has been returned to the United States.”

Is that right? And if yes, are the tax cuts to thank? Let’s take a closer look.

Checking the source

In response to The Conversation’s request for sources and comment, a spokesperson for Cormann provided GDP and capital investment data from the US Bureau of Economic Analysis, employment data from the US Bureau of Labor Statistics, a Bloomberg article, and a January 2018 World Economic Outlook from the International Monetary Fund.

You can read the full response from Cormann’s office here ..
https://theconversation.com/full-response-from-mathias-cormann-for-a-factcheck-on-corporate-tax-cuts-and-the-us-economy-101521 .

Verdict

Minister for Finance Mathias Cormann’s statement that corporate tax cuts in the US had “led to stronger investment, stronger growth, lower unemployment rate and higher wages” is not supported by evidence.

Many links, and much more - https://theconversation.com/factcheck-have-the-trump-tax-cuts-led-to-lower-unemployment-and-higher-wages-101460