Trump Tax Gives Record Benefits To Wealthy Shareholders & Big Banks, Virtually Nothing to Workers
May 23, 2018
Last night, Donald Trump said he will propose new tax cuts before our next election. If the Trump tax that passed is any indication, we know who will benefit… and it won’t be workers.
Big corporations have used their massive tax savings to reward wealthy shareholders with record-setting buybacks.
CNN Money: “It’s raining buybacks: Corporate America is throwing a record-setting party for shareholders. S&P 500 companies showered Wall Street with at least $178 billion of stock buybacks during the first three months of 2018, according to Howard Silverblatt of S&P Dow Jones Indices. That’s a 34% bump from last year and tops the prior record of $172 billion set in 2007, just prior to the start of the Great Recession.”
CNN Money: “The buyback bonanza occurred during the first full quarter after President Donald Trump signed into law a massive corporate tax cut that was supposed to lift business spending on job-creating investments. The tax law reduced the corporate tax rate to 21% from 35% and gave companies a break on taxes owed when returning foreign profits. That one-two punch allowed companies to reap huge profits, a sizable chunk of which have been returned to shareholders.”
Workers have been left out of the benefits of the Trump tax – which have instead gone to shareholders and corporate profits.
Vox: “Harley-Davidson took its tax cut, closed a factory, and rewarded shareholders”
Vox: “It’s a pattern that’s played out over and over since the tax cuts passed — companies profit, shareholders reap the benefits, and workers get left out. Corporate stock buybacks hit a record $178 billion in the first three months of 2018; average hourly earnings for American workers are up 67 cents over the past year.”
Banks were among the biggest beneficiaries of the Trump tax, and recorded a record $56 billion profits in the first three months of the year.
Reuters: “U.S. banks reported $56 billion in profits in the first quarter, up 27.5 percent from a year earlier, as institutions began to take advantage of a lower effective tax rate, the Federal Deposit Insurance Corporation (FDIC) reported Tuesday.”
Despite Republicans’ promises, the Trump tax has not spurred new business investment.
CNN Money: “Business spending is humming along at healthy levels, but economists see little evidence that the tax cuts sparked an acceleration of investments in new equipment, factories or other projects. ‘There is nothing to suggest the tax law is lifting investment in any substantive way, at least so far,’ said Mark Zandi, chief economist at Moody’s Analytics.”
Democrats support investing in education and teacher pay instead of tax breaks for the wealthiest 1 percent.
Associated Press: “Responding to teacher walkouts across the country, congressional Democrats on Tuesday proposed raising teachers’ salaries by canceling the tax cut for the nation’s top 1 percent of earners.”
Huffington Post: “As more and more teachers protest their states’ funding cuts, Democrats in Congress say they have a plan to restore school spending and boost teacher pay… Democrats said their plan would pay for those investments by paring back some of the tax cuts for the wealthy in the Republican tax package passed by Congress last year and signed by President Donald Trump.”