A new study of the tax cuts pushed through by Trump and the Republican-controlled Congress finds that companies are not using their windfall for new investment or to increase wages for workers, but to buy back stock, thus increasing its value to the already-rich major stockholders.
Trump and Republican leadership have long touted their tax cuts as a massive boon to America’s working class, if not through direct tax reductions or refunds, then through the trickle-down effect of bonuses and wage increases from their employers who receive massive corporate cuts. “Tax reform is working,” Republican House Speaker Paul Ryan said in January, mentioning Apple’s decision to reward a bonus of $2,500 in stock grants to some Apple employees. “Workers are coming home and telling their families they got a bonus, or they got a raise or they got better benefits.”
But a new analysis of all Fortune 500 companies found only 4.3 percent of workers will receive a one-time bonus or wage increase tied to the business tax cuts, while businesses received nine times more in cuts than what they passed on to their workers, according to Americans for Tax Fairness, a political advocacy group devoted to tax reform. The analysis also found that companies spent 37 times as much on stock buybacks than they did on bonuses and increased wages for workers.
So they resort to argument by anecdote, knowing that people remember a single example and are convinced by it far more readily than they are actual studies and data. If only someone had predicted that this would be the result. Someone like…well, me, and pretty much every mainstream economist in the country.
Every single thing predicted by opponents of the tax cut has come true. It hasn’t trickled down to workers, it hasn’t caused an economic boom and it has exploded the deficit enormously. And now, just as predictably, Republicans are using the increased deficit that they created to justify cuts in social assistance programs.