Tax cuts for the large corporations who wrote the Republican tax scam legislation haven’t even lead to any increase in investment. In January, orders for non-defense capital goods actually fell by about 1.5 percent, and since orders take little time to initiate, they should have increased if the tax cuts were to spur investment. The reality of what a scam this whole ordeal was must be remembered for fighting off the same problem in the future.
While many corporations immediately launched aggressive PR campaigns crediting the tax plan Trump signed in December with new “investments” in employees, a study by the nonprofit group JUST Capital published on Wednesday found that the sensational headlines touting worker bonuses obscured the fact that the vast majority of the law’s benefits have gone straight to the pockets of wealthy shareholders.
“Post-tax cut raises, bonuses, and other worker investments announced by 90 of the largest publicly-traded corporations average just six percent of the total windfall these companies have received from the biggest tax cut in U.S. history,” the group found.
The analysis also showed that 56 percent of these worker investments came in the form of one-time bonuses, not permanent pay raises.
Additionally, the vast majority of companies examined invested none of their windfall into new jobs, while just a few companies said they invested a large percentage—making it appear that all of the companies invested more in jobs than they actually did.
Bolstering JUST Capital’s study was a New York Times analysis published on Monday, which found that rather than investing their tax windfalls, companies are using the extra cash to buy their own shares—a practice that further enriches already wealthy executives and investors but does little to nothing for workers or the overall economy.
“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,” notes Matt Phillips of the Times.
That amount dwarfs the relatively small gains workers are seeing from the tax law.
As the economists Rick Wartzman and William Lazonick noted in a recent op-ed for the Washington Post, the “nation’s workers are getting woefully little, at least relatively speaking.”
“Peeking beyond the PR, our analysis finds that major corporations are planning to spend more than 30 times what they are putting in the wallets of employees on buying back their own stock,” Wartzman and Lazonick concluded.