Trump's touted $4,000 middle-class raise under the GOP tax plan is really $500 a year, highly speculative

Trump pitches tax reform
(Image credit: Mandel Ngan/AFP/Getty Images)

President Trump flew to Harrisburg, Pennsylvania, on Wednesday evening to promote the emerging Republican tax plan as a big tax cut for the middle class, telling the gathered "truckers for tax reform" that "you're going to make more money, you're going to do better than ever before." Specifically, he said that a proposal to encourage U.S. companies to bring their foreign profits home "would likely give the typical American household a $4,000 pay raise" or more, citing the White House Council of Economic Advisers (CEA).

Trump was apparently referring to a "simple back-of-the-envelope calculation" from CEA chairman Kevin Hassett, who estimated in a speech last month that if U.S. firms didn't park their profits abroad, the jump in U.S. corporate profits would be passed on to workers, and over eight years, "the median U.S. household would get a $4,000 real income raise." If you make $50,000 a year, CNNMoney explains, Hassett's predicted 1 percent raise would be $500 a year, or $4,000 over eight years.

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Peter Weber, The Week US

Peter has worked as a news and culture writer and editor at The Week since the site's launch in 2008. He covers politics, world affairs, religion and cultural currents. His journalism career began as a copy editor at a financial newswire and has included editorial positions at The New York Times Magazine, Facts on File, and Oregon State University.