First Quarter Expenditures Reveal The Truth Behind the GOP Tax Scam
May 30, 2018
In response to corporations’ reported surge in first quarter earnings, DNC spokesperson Daniel Wessel released the following statement:
“Trump and Republicans said the Trump tax would spur investment and create jobs. That was a lie. First quarter earnings reveal the truth behind the GOP tax scam — corporations are using their massive tax windfalls to benefit themselves and their wealthy shareholders, not their workers.”
Bloomberg: Trump’s Tax Cut Hasn’t Changed How Companies Spend—Just How Much
By Matthew Townsend and Brandon Kochkodin
The corporate tax cut put some $30 billion into the pockets of America’s largest companies in the first quarter. How’s it being spent?
Not necessarily the way President Donald Trump and Republicans said it would. They sold the cut as a means for companies to spur investment in America and create jobs.
But S&P 500 companies aren’t following through, at least not yet. Relative to cash flow, they are spending about what they always spent on such things as job-producing capital expenditures and shareholder goodies in the form of dividends and stock buybacks.
But wage gains alone remain tepid. In the first quarter, the measure barely moved above the 2.2 percent average of the recovery, and in April it missed estimates.
Cash on hand at S&P 500 companies is soaring to record levels in 2018, to $1.78 trillion, boosted in part by the tax cut. But on a relative basis, their cash holdings rose 4.6 percent, slightly below the average quarterly gains last year. That suggests uncertainty over how the tax law will be implemented, especially how overseas profits will be treated.