White House chief economic adviser Gary Cohn asserted during an interview that the Trump administration's tax plan will benefit all Americans through trickle-down economics. Cohn stated that corporate CEOs are excited about the proposed tax cuts because they would potentially increase investment in the U.S.
On Nov. 9, Cohn discussed the GOP tax proposal during an interview. Trump's chief economic adviser had helped spearhead the White House's proposals for rewriting the U.S. tax code.
"We believe that we're going to have a very stimulative effect on the economy by lowering the business tax rate, by lowering the corporate tax rate, and making America competitive with the rest of the world," Cohn told CNBC.
Cohn, who worked as a Goldman Sachs executive before joining the Trump administration, asserted that corporations were excited about the tax proposal because it would compel them to move portions of their money from offshore accounts and invest it back into the country.
"The most excited group out there are big CEOs, about our tax plan," Cohn continued. "They all tell me how excited they are to get a tax plan that makes the United States competitive, makes it so they can grow their business domestically, makes it so they can -- actually pay wages here."
House Republicans had previously introduced their tax plan, titled the Tax Cut and Jobs Act. The legislation would slash the corporate tax rate from its current 35 percent to 20 percent.
Interviewer John Harwood noted that critics of the tax plan had argued that it would increase the federal deficit without creating enough economic growth to offset losses in federal revenues and that it would not create higher wages for workers.
"We vehemently don't agree," Cohn responded. "When you take a corporate tax rate at 35 percent and move it to 20 percent ... it's hard for me to not imagine that they're going to bring businesses back to the United States."
He added: "We create wage inflation, which means the workers get paid more; the workers have more disposable income, the workers spend more. And we see the whole trickle-down through the economy, and that's good for the economy."
Trickle-down economics is the economic theory that providing corporations with tax breaks leads those businesses to accumulate more wealth that will seep down to workers. Critics assert that the economic theory has been disproven by the results of previous changes to the tax code.
Jared Bernstein of the Center on Budget and Policy Priorities blasted Cohn for his comments, asserting that trickle-down was a myth.
"Republicans weave a fantastic tale with lots of steps," Bernstein told Newsweek. "They create a chain of events with lots of links, and every link has proven to be false. The truth is we've tried this many times before and it always fails."
On Nov. 9, the Senate Finance Committee revealed its own tax plan to compete with the House proposal. The Senate bill offered different changes to the tax code but maintained the House proposal to lower the corporate tax rate to 20 percent, NPR reports.