The Results Are In: Wealthy Shareholders And Corporate Executives Have Cashed In On The Trump Republican Tax Law, While American Workers Have Been Left BehindJanuary 28, 2019
Reuters: $1.5 Trillion U.S. Tax Cut Has No Major Impact On Business Capex Plans: Survey
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
Senate Dems: The Trump-Republican Tax Law Has Failed The American People
Washington, D.C. – Just over one year after the GOP tax scam was signed into law, Senate Democrats today released a new video highlighting that the tax law has failed working American families while overwhelmingly benefitting the wealthiest few. 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.
Senate Democratic Leader Chuck Schumer (D-NY) released the following statement: “Republicans tried to bamboozle the American people with false claims that their deficit-busting tax giveaway to corporate America and the wealthiest few was really going to be a ‘middle class miracle.’ It did not work. The tax law has backfired. While wealthy executives and investors have benefitted from tax giveaways and a record $1 trillion in corporate stock buybacks, many American workers who were promised a $4,000 raise got a pink slip instead. President Trump and Republicans responsible for this devastating law should apologize to the American people and work with us to undo the damage it has done.”
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]
Congressional Budget Office: “Positive Effects Of Recent Tax Legislation On Business Investment Are Expected To Wane” In 2019: “In CBO’s economic forecast, which underlies its budget projections, the economy expands more slowly over the next decade than it did in 2018, averaging annual growth of 1.7 percent over the 2020– 2029 period. The slowdown begins in 2019 as the positive effects of recent tax legislation on business investment are expected to wane and federal purchases under current law are projected to drop sharply starting in the fourth quarter of the year.” [CBO, The Budget and Economic Outlook, 2019 to 2029, 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]
The video can be viewed here.