Republicans are very proud of their tax bill — they continuously tout the number of Americans who got some kind of employee bonus after it passed. Or, they were.
For some reason, as Politico noted, they’ve backed off campaigning on the issue. Instead of basing their re-election hopes on the financial worries Americans care about, they seem to be shifting toward cultural fears like immigration. Maybe they recognize Trump’s harebrained tariffs are effectively a tax hike that offsets any consumer savings.
Or maybe they recognize the obvious: Businesses aren’t going to pass on very much of their tax savings to workers when they can give it to shareholders instead.
Show me the money
It’s never been clear that tax cuts were going to contribute to the yuge economic growth Republicans promised. It’s true that roughly 3 million workers got some kind of bonus, but it’s hard to say some of those weren’t already going to happen.
Or that most of them weren’t a PR stunt to get Trump on their side for potential mergers, deregulation, or other lobbying efforts. (Looking at you, AT&T and Wells Fargo.)
Or that there wasn’t some bandwagoning going on — the bonuses are clearly concentrated in certain industries like airlines and banking, and if your competition announces a bonus you better give one out too before they poach your staff.
But, regardless, 3 million one-off bonuses is really nothing compared to the gains corporations are getting out of the law. Those aren’t permanent raises, hiring promises, reinvestment or profit-sharing that require a long-term commitment and would actually improve people’s lives.
“Bank of America’s bonuses will cost the bank $145 million in 2018, or about 5 percent of the nearly $2.7 billion in savings it is expected to reap in 2018 from a lower, 21 percent corporate tax rate,” The New York Times noted. So, that’s 95 percent the company will simply pocket the first year, and 100 percent going forward. “Apple’s bonuses will cost $300 million, a fraction of the $40 billion, at least, that the tech giant is saving from a single provision in the law.”
This isn’t trickle-down economics — nonsense to start with — so much as popping open a bottle of champagne and spraying people with it. Once it’s empty, that’s it. For workers, the party is over in five seconds. Only about 2 percent of Americans say they’ve gotten a raise, bonus, or other benefit because of the tax law.
For executives, the party’s just getting started. Corporations are only starting to reap the benefits of the change. Will they start offering raises later? Maybe, but so far they have other ideas.
At least they’re honest
Companies aren’t exactly hiding their plans for their tax savings:
An S&P Global report estimates that banks will return 75 percent of their windfall to shareholders. More than four in five Morgan Stanley analysts, across industries, said in a survey that the firms they track will use their tax gains to facilitate buybacks and dividends. Barely one in five said firms would pass even some of the tax gains on to workers.
The plan was never to share with the people who do the work, but to share with the people who have the money. So far, American companies have announced more than $178 billion in planned stock buybacks, the largest amount ever seen in a single quarter.
The goal is simply to increase record-high profits even further — while increasing the federal debt, because Republicans don’t have a plan to make up the lost revenue and aren’t making proportionate budget cuts.
Maybe I’m being too cynical, and companies do plan to share. Maybe they’re just being cautious because they expect the Obama economy to turn south now that Trump is in the driver’s seat. Where he doesn’t leave vacancies, he appoints amateurs. And sooner or later, without maintenance, the wheels will come off. We’ll all want a little more money for that rainy day.
Article last modified on July 12, 2018. Published by Debt.com, LLC . Mobile users may also access the AMP Version: Companies Aren’t Investing in Employees. They’re Investing in Themselves - AMP.
Article last modified on July 12, 2018. Published by Debt.com, LLC .