Story highlights Jeffrey Sachs: President Trump and GOP leaders claim corporate tax cuts would boost growth and thereby pay for themselves

It's the same voodoo they've endlessly peddled, Sachs writes, and it's an ominous threat to the common good

Jeffrey Sachs is a professor and director of the Center for Sustainable Development at Columbia University. The opinions expressed in this commentary are his.

(CNN) Treasury Secretary Steve Mnuchin's call for corporate tax cuts is akin to his request for a government plane for his honeymoon: both are adventures in avarice. Donald Trump, Mnuchin, Gary Cohn, and the key billionaire funders of the Republican Party (including the Koch brothers, Sheldon Adelson, and Robert Mercer) would each reap a fortune from the proposed tax cuts. They are out to loot the kitty, and are close to getting away with this daylight robbery.

Jeffrey Sachs

President Trump and the Republican leadership in Congress assert that corporate tax cuts would boost growth and thereby pay for themselves, the same voodoo they've endlessly peddled. They claim that the US corporate tax rate is so high relative to competitor nations that the US tax cut will level the global playing field and shift corporate investments to the US, boosting wages in the process. All these assertions are grossly exaggerated if not dead wrong.

The US top statutory corporate rate does seem high at 39% compared with around 30% in Germany and 24% in the United Kingdom, as reported in a recent study by the Congressional Budget Office (CBO). Yet the same study shows that the US "effective" tax rate -- which factors in cost recovery allowances, interest deductibility, and expensing of R&D, in order to measure the real incentive to invest -- is much lower than the statutory rate and much closer to the rates of America's competitors. According to the CBO, the US effective tax rate is currently around 18.6%, essentially the same as the UK's effective rate (18.7%) and not far above Germany's effective rate (15.5%).

Under these circumstances, a deep cut of the US tax rate would be a pure provocation to other nations, which would also cut their tax rates in response to the US. And our competitors would be in a good position to do so. They could offset a new round of corporate tax cuts with a boost to their value-added tax (VAT) rates and thereby not lose budget revenues. The other countries don't prefer that route (it's regressive), but they would take it if the US were to force their hand.