Trump, Democrats spar over whether tax plan will help middle class

By Mike Stone

WASHINGTON (Reuters) - Middle-class Americans' incomes would eventually rise more than $4,000 if corporate tax cuts were enacted, the Trump administration said in an analysis released on Monday to counter Democratic criticisms that its tax proposals overwhelmingly benefit the rich.

The White House and top Republicans in Congress have unveiled a broad framework for tax reform but lawmakers have yet to work out details of a legislative proposal.

President Donald Trump has said he would like to see the U.S. corporate income tax rate reduced to 20 percent from the current 35 percent rate.

An analysis by the White House Council of Economic Advisers said lower corporate taxes would give companies incentive to invest in new machines that would require more skilled workers, who would then be paid higher wages.

Senate Democratic Leader Chuck Schumer accused the administration of "deliberate manipulation of numbers and facts" in its analysis and said companies already are sitting on a lot of cash.

"As the president likes to point out, the stock market is at record highs and companies are raking in unprecedented profits, yet wages have remained relatively flat," Schumer said in a statement on Monday. "That's proof positive that companies already have a cash windfall but they're not using it to boost wages."

The Tax Policy Center, a nonpartisan research organization, said the overall benefits of lower corporate taxes tilt heavily toward those with higher incomes.

It said middle-income taxpayers would receive less than 10 percent of the benefit of a corporate rate cut while the top 20 percent would receive about 70 percent. The top 1 percent would see about one-third of the benefits and the top 0.1 percent would get about one-fifth, the center has said.

Republicans, who control both the House of Representatives and the Senate along with the White House, have said they want to pass their tax reforms by the end of the year but it remains unclear whether they will meet their deadline.

Trump, who is scheduled to meet with Senate Majority Leader Mitch McConnell at the White House on Monday, is particularly eager for a major legislative win after failing to get Congress to repeal and replace Obamacare earlier this year.

Democrats have lambasted the Trump tax plan's intended tax relief for corporations and small businesses as a giveaway for the wealthy.

Trump fired back in a separate tweet on Monday: "The Democrats only want to increase taxes and obstruct. That's all they are good at!"

(Additional reporting by Susan Heavey; Editing by Cynthia Osterman and Bill Trott)