Republicans Continue To Lie: Trump Tax Is Not Trickling Down
February 27, 2018
Trump and Republicans continue to lie about the benefits of the Trump tax. As corporations announce record buybacks that benefit their shareholders and top executives, it’s clear that the Trump tax is not trickling down to their workers.
Trump and Republican lawmakers’ claims that the Trump tax is trickling down to American workers is “pure fantasy.”
New York Times Editorial: “The president and Republican lawmakers quickly held up these news releases as vindication for their argument that cutting the top federal corporate tax rate to 21 percent, from 35 percent, would boost workers’ incomes even as it added $1.5 trillion to the debt that future generations would have to pay off. Now corporate announcements and analyst reports confirm what honest observers always said — this claim is pure fantasy. As executives tell investors what they intend to do with their tax savings and their spending plans are tabulated into neat charts and graphs, the reports jibe with what most experts said would happen: Companies are rewarding their stockholders.”
While corporations have announced a record $178 billion in planned buybacks, only a small sliver of savings will find their way into employee paychecks.
New York Times: “But the buying back of shares is also at record levels. Almost 100 American corporations have trumpeted such plans in the past month. American companies have announced more than $178 billion in planned buybacks — the largest amount unveiled in a single quarter, according to Birinyi Associates, a market research firm.”
CNBC: “‘Despite all the attention lavished on $1,000 one-time bonus checks paid out by various large employers, the buyback boom is one sign that the tax cut is likely to do far more for business owners and investors than the typical household,’ David Santschi, director of liquidity research at TrimTabs, said in the firm's weekly report.”
New York Times Editorial: “In addition to benefiting investors, these maneuvers will end up boosting the pay of top executives because their compensation packages are often tied to the price of their companies’ stock. Finally, a small sliver of the money will find its way into paychecks of rank-and-file employees, but it won’t be a big boost and will probably come in the form of a temporary bonus, rather than a lasting raise.”
Despite the Trump administration’s continued lies, the Trump tax still overwhelmingly benefits the wealthiest Americans, at the expense of the poorest.
Marketplace: “Asked by an audience member how he's benefiting from the new tax law, Mnuchin says he doesn't believe he is.”
Vox: “The richest Americans, those in the 95th percentile or above (meaning they earn $308,900 or more come the year 2025) do very well, seeing a boost of more than 3 percent to their after-tax incomes. That’s primarily a result of reductions in their individual income tax rates and a big cut to taxes on corporations, which are disproportionately owned by wealthy individuals. But the very poorest Americans see a fall in their after-tax income that is almost as large. That is almost entirely the result of the law’s repeal of the Affordable Care Act’s individual mandate.”
New York Times: “But the purchases can come at the expense of investments in things like hiring, research and development and building new plants — the sort of investments that directly help the overall economy. The buybacks are also most likely to worsen economic inequality because the benefits of stocks purchases flow disproportionately to the richest Americans.”