State Of The Trump Economy: Wealthy Shareholders And Corporate Executives Have Cashed In On The Trump Republican Tax Law, While American Workers Have Been Left BehindFebruary 4, 2019
Over And Over Again, Corporations Touted By Trump And Republicans As Tax Law Success Stories Have Laid Off American Workers.
Instead Of Helping Working Americans, Big Corporations Have Used Their Windfall From The Tax Law To Enrich Wealthy Shareholders And Corporate Executives With Record Corporate Stock Buybacks –While Laying Off Too Many American Workers
CNN Business: The Tax Cut Investment 'Boom' Is Already Over. Some Say It Never Really Started
Washington, D.C. –Republicans said that their tax bill would mean a $4,000 raise for working American families and spur a boom in business investment – a promise that has failed to materialize on both scores. In the first year since the tax bill became law, corporations announced more than $1 trillion in corporate stock buybacks, benefitting corporate executives and wealthy shareholders, while far too many Americans who were promised increased wages have instead faced layoffs. The promised boom in investment failed to materialize.
OVER AND OVER AGAIN, CORPORATIONS TOUTED BY TRUMP AND REPUBLICANS AS TAX LAW SUCCESS STORIES HAVE LAID OFF AMERICAN WORKERS.
Wells Fargo announced it will lay off thousands of workers despite a $3.4 billion boost from the Republican tax law this year. Wells Fargo also repeatedly announced it will reward corporate executives and wealthy shareholders with tens of billions of dollars through corporate stock buyback programs. President Trump and Sen. McConnell touted Wells Fargo as a tax bill success story.
Harley-Davidson is closing a Kansas City motorcycle assembly plant, resulting in 800 workers losing jobs. Harley Davidson also announced it will reward corporate executives and wealthy shareholders with a $696 million corporate stock buyback program. Then-Speaker Ryan touted Harley-Davidson when selling the tax bill.
Kroger announced plans to close 14 stores, impacting 1,500 workers. Kroger also announced it will reward corporate executives and wealthy shareholders with more than $2 billion in corporate stock buyback programs. Republicans touted Kroger as a tax law success story.
REPUBLICANS’ PROMISES THAT THE TAX LAW WOULD MEAN A BOOM IN BUSINESS INVESTMENT HAVE FALLEN FLAT
Reuters: $1.5 Trillion U.S. Tax Cut Has No Major Impact On Business Capex Plans: Survey. “The Trump administration’s $1.5 trillion cut tax package appeared to have no major impact on businesses’ capital investment or hiring plans, according to a survey released a year after the biggest overhaul of the U.S. tax code in more than 30 years. The National Association of Business Economics’ (NABE) quarterly business conditions poll published on Monday found that while some companies reported accelerating investments because of lower corporate taxes, 84 percent of respondents said they had not changed plans. That compares to 81 percent in the previous survey published in October. The White House had predicted that the massive fiscal stimulus package, marked by the reduction in the corporate tax rate to 21 percent from 35 percent, would boost business spending and job growth. The tax cuts came into effect in January 2018. ‘A large majority of respondents, 84 percent, indicate that one year after its passage, the corporate tax reform has not caused their firms to change hiring or investment plans,’ said NABE President Kevin Swift.” [Reuters, 1/28/19]
CNN Business: The Tax Cut Investment 'Boom' Is Already Over. Some Say It Never Really Started. “Proponents of the 2017 tax law predicted it would set off a wave of spending by American businesses. It did — just not the kind economists hoped for. Corporate America rewarded investors by rolling out $1 trillion of stock buybacks in 2018. Yet a lasting boom in job-creating investments has yet to materialize. Business spending on things like factories, software and new equipment jumped in the first quarter after the tax law took effect. But it has decelerated as companies worry about slowing global growth and rising trade tensions. ‘There hasn't been a huge surge in response to tax reform,’ said Eric Zwick, a professor at the University of Chicago Booth School of Business who studies the interaction between public policy and corporate behavior.” [CNN Business, 1/23/19]
S&P Chief US Economist Beth Ann Bovino: "Stock buybacks usually go to high earners, and high earners usually save rather than spend," Bovino said in an interview. "Whether businesses do invest in areas that improve productivity remains to be seen." [The Street, 6/6/18]
CORPORATIONS USED THEIR TAX WINDFALL TO FUND MORE THAN $1 TRILLION IN CORPORATE STOCK BUYBACKS THAT OVERWELMINGLY BENEFIT CORPORATE EXECUTIVES AND WEALTHY SHAREHOLDERS
CNN Business: Corporate America Gives Out A Record $1 Trillion In Stock Buybacks. “Corporate America celebrated the first full year under the new tax law by rolling out a record-setting $1 trillion of stock buybacks.” … “‘It's no coincidence,’ said David Santschi, TrimTabs' director of liquidity research. ‘A lot of the buybacks are because of the tax law. Companies have more cash to pump up the stock price.’ Not only did the tax law reduce the corporate rate, but it gave a big break to companies returning foreign profits. Companies have used a sizable chunk of that windfall to reward shareholders. Buyback announcements have spiked 64% so far this year, TrimTabs said.” [CNN, 12/17/18]
S&P: S&P 500 Q3 2018 Buybacks Surpass $200 Billion Mark for the First Time Ever. “S&P Dow Jones Indices ("S&P DJI") announced today that preliminary Q3 2018 S&P 500® stock buybacks, or share repurchases, surpassed the $200 billion mark for the first time to set a record $203.8 billion. This is the third consecutive record, displacing the prior quarterly record of $190.6 billion, set during Q2 2018 and a 57.7% increase from the $129.2 billion reported for Q3 2017.” … “‘Companies have used their tax savings to push up discretionary buybacks and boost earnings through significantly reduced share counts,’ said Howard Silverblatt, Senior Index Analyst at S&P Dow Jones Indices.” [Press Release, 12/18/18]
Barron’s: Expect Another Big Year for Stock Buybacks, JPMorgan Says. “S&P 500 companies unveiled plans to buy back almost $1 trillion in stock last year, on the heels of the Trump administration’s 2017 tax overhaul. The buyback party is likely to continue this year, according to JPMorgan.” [Barron’s via WSJ, 1/28/19]
CORPORATIONS ARE USING THEIR WINDFALL FROM THE TRUMP-REPUBLICAN TAX LAW TO FUND MASSIVE CORPORATE STOCK BUYBACKS – THEN, THEY ARE LAYING OFF AMERICAN WORKERS.
- CSX announced plans to lay off thousands of workers. CSX also announced it will reward corporate executives and wealthy shareholders with a $3.5 billion increase in their corporate stock buyback program. In 2019, CSX announced that they are ahead of schedule and that the company will expand their stock buyback program and keep cutting American jobs.
- ConocoPhillips announced it will lay off workers in Houston. ConocoPhillips also announced it will reward corporate executives and wealthy shareholders with an additional $9 billion corporate stock buyback program.
- Qualcomm announced plans to lay off 1,500 workers. Qualcomm also announced it will reward corporate executives and wealthy shareholders with a $8.8 billion corporate stock buyback program. Later in 2018, Qualcomm announced they would reward shareholders with an additional $20 billion corporate stock buyback program.
- McKesson announced it will lay off hundreds of workers. McKesson also announced it will reward corporate executives and wealthy shareholders with a $4 billion corporate stock buyback program.
- Devon Energy announced plans to lay off nine percent of its workforce – about 300 workers. Devon Energy also announced it will reward corporate executives and wealthy shareholders with billions of dollars through a corporate stock buyback program.
- Kimberly-Clark announced plans to cut up to 5,500 jobs. Kimberly-Clark also announced it will reward corporate executives and wealthy shareholders with $700-$900 million in corporate stock buybacks in 2018.
- Hess Corporation announced they will lay off hundreds of workers. Hess Corporation also announced it will reward corporate executives and wealthy shareholders with a $1 billion corporate stock buyback program.
- Cardinal Health announced it will lay off 100 workers. Cardinal Health also announced it will reward corporate executives and wealthy shareholders with a $1 billion corporate stock buyback program.