The Trump-McConnell Tax Law Has Failed The American People

June 20, 2019

The Trump-McConnell Tax Law Has Failed The American People

At the end of 2017, Republicans jammed through a tax law that President Trump promised would be a “middle-class miracle,” despite all indications to the contrary. Now, new reports show that while the benefits to corporations and the wealthiest few are even larger than anticipated, workers saw little to no benefit. Even worse, big corporations touted by President Trump and Sen. McConnell as tax law success stories are now laying off American workers.

The facts are clear: the Republican tax bill that was sold as “rocket fuel” for the economy and a boon to the middle class. Instead, the vast majority of the benefits have gone to corporations and the wealthiest few.

THE RESULTS ARE IN: THE TRUMP-MCCONNELL TAX LAW OVERWHELMINGLY BENEFITTED WEALTHY SHAREHOLDERS VIA STOCK BUYBACKS – NOT WORKERS

Axios: More Spent On S&P 500 Buybacks Than All 2018 R&D. “Total research and development spending in the U.S. last year totaled $608 billion, according to data from the Federal Reserve, while corporations in the S&P 500 spent $806 billion buying back their own stock. The total for all companies was well over $1 trillion. What it means: In 2018, the 500 biggest U.S. companies spent 33% more on their stock buyback programs than the country is investing in research and development. The trend looks to be continuing this year as the U.S. is on pace to spend $642 billion on R&D in 2019 and poised to surpass last year's $1.085 trillion total in buyback spending.” [Axios, 6/19/19]

WSJ: Bonuses Drop, Signaling Tax-Cut Payouts Were A One-Time Windfall. “A boom in employee bonuses handed out by some companies in the wake of the 2017 Republican tax cut proved to be temporary, Labor Department data released Tuesday showed. Private-sector companies’ spending on nonproduction bonuses fell 24% in the first quarter of 2019 from a year earlier, the largest decrease for the category of benefit costs on record back to 2005. Those bonus payments jumped in late 2017 and early 2018 after Congress approved its package of tax cuts. Walmart Inc., AT&T Inc. and Wells Fargo & Co. were among prominent employers that announced bonuses in the wake of the new tax law. President Trump and other Republicans touted the bonuses as an example of how the law benefited everyday workers. Those gains appear to largely have been a one-time windfall.” [WSJ, 6/18/19]

Politico: Big Businesses Paying Even Less Than Expected Under GOP Tax Law. “Federal tax payments by big businesses are falling much faster than anticipated in the wake of Republicans’ tax cuts, providing ammunition to Democrats who are calling for corporate tax increases. The U.S. Treasury saw a 31 percent drop in corporate tax revenues last year, almost twice the decline official budget forecasters had predicted. Receipts were projected to rebound sharply this year, but so far they’ve only continued to fall, down by almost 9 percent or $11 billion.” [Politico, 6/13/19]

JUST Capital: Looking Back On Tax Reform: Workers Aren’t Winning. “We estimated that 56% of tax savings were headed toward shareholders in the form of stock buybacks or direct distributions, while just 6% directly benefited workers, with more than half of that in the form of one-time bonuses instead of permanent raises or benefits. This is in direct opposition to what the American public told us when we asked them how they thought companies should allocate their tax windfall – with respondents agreeing that 24% of savings should go toward workers and just 10% toward shareholders.” [JUST Capital, 6/6/19]

Congressional Research Service: “During the passage of the tax revision and in the immediate aftermath, some argued that firms would use these funds to pay worker bonuses (as discussed in the previous section on wages). Subsequently, a number of firms announced bonuses, which in some cases they attributed to the tax cut. One organization that tracks these bonuses has reported a total of $4.4 billion. With U.S. employment of 157 million, this amount is $28 per worker. This amount is 2% to 3% of the corporate tax cut, and a smaller share of repatriated funds.” … “Much of these funds, the data indicate, has been used for a record-breaking amount of stock buybacks, with $1 trillion announced by the end of 2018.” [Congressional Research Service, 6/7/19]

COMPANIES TOUTED BY REPUBLICANS AS TAX LAW SUCCESS STORIES HAVE LAID OFF THOUSANDS OF WORKERS, SHIPPED JOBS OVERSEAS

Charlotte Observer: Wells Fargo Shifts Many Jobs Overseas Following Layoffs In The US, Documents Show. “Wells Fargo has laid off hundreds of U.S. employees during the past year as it pushed many of their jobs overseas, according to an Observer analysis of federal documents. In the Charlotte metro area, the bank’s largest employment hub, mortgage jobs eliminated this year have also been sent overseas, Wells confirmed. The bank slashed hundreds of such workers in the area but would not disclose how many of those jobs it has sent outside the U.S. The documents, published online by the U.S. Department of Labor, shed light on how Wells Fargo has shifted work out of the country. Many of the U.S. layoffs have affected call center operations, including about 460 employees cut last year when Wells Fargo announced the closure of a site in Pennsylvania.” [Charlotte Observer, 12/25/18]

Financial Times: Wells Fargo Plans To Close 900 Branches Despite $3.4bn Tax Boost. “Wells Fargo plans to close about 900 branches as part of efforts to cut costs in the wake of its mis-selling scandal even though the bank’s profits received an immediate $3.4bn boost from the US corporate tax cut.” [Financial Times, 1/12/18]

  • President Donald Trump:  “And I tell you, that tax cut bill is something with what's it's kicking in.  Literally we know when the big companies -- AT&T, Comcast, so many others, Wells Fargo -- they're giving thousands of dollars to their employees.” [Remarks in West Palm Beach, 12/27/17]
  • Senate Majority Leader Mitch McConnell (R-KY): “Consider the issue of the minimum wage. Because of tax reform, Hormel Foods has raised starting pay to $13. Wells-Fargo has established a $15 minimum wage. [Press Release, 3/13/18]

Dallas Morning News: AT&T To Cut Nearly 2,000 Jobs, Telecom Labor Union Says. “About two years after Dallas-based AT&T championed corporate tax cuts and pledged they'd lead to job creation, the company plans to cut nearly 2,000 jobs, according to the telecom union that represents its workers. Officials from Communications Workers of America say AT&T began notifying employees Thursday about the upcoming cuts. It will eliminate 1,880 jobs by the end of September in 23 states, including Texas and Oklahoma, the union said. The cuts are aimed at technicians, such as those who do home installations or lay fiber optic cable.  About 400 of those jobs are in Texas, CWA communications director Beth Allen said.” [Dallas News, 6/17/19]

  • President Donald Trump: “This just came out. … AT&T plans to increase U.S. capital spending $1 billion and provide $1,000 special bonus to more than 200,000 U.S. employees, and that’s because of what we did.” [Politico, 12/20/17]
  • Senate Majority Leader Mitch McConnell (R-KY): “Mr. President, yesterday, I mentioned that, already, 1 million Americans and counting will receive raises or special bonuses, thanks to the incentives created by the historic tax reform law that Congress passed and the President signed just last month.” … “AT&T announced that 200,000 employees would receive $1,000 bonuses.” [Floor Remarks, 1/09/18]
  • Sen. John Cornyn (R-TX): “In the days and months following the signing of the tax bill, companies began announcing how they would use the money that they would save because of the legislation to invest in their employees and their business. We heard from big companies like AT &T, which is headquartered in Dallas, which provided $1,000 bonuses for more than 200,000 of its employees, including more than 32,000 who live in Texas.” [Floor Remarks, 5/7/19]
  • Sen. Cory Gardner (R-CO): “Just hours ago, AT&T announced that it will invest an additional $1 billion in the United States in 2018 and that it will give more than 200,000 of its U.S. employees a bonus of $1,000—all because of the tax relief bill that we have been working on that we passed today.” [Floor Remarks, 12/20/17]

Charlotte Observer: Walmart To Lay Off Hundreds Of Corporate Employees In Charlotte After Outsourcing Work. “Walmart will lay off nearly 570 corporate employees at its facility near Charlotte’s airport as the retailer transitions its finance and accounting services to a third-party vendor. The layoffs will begin in September and will continue in waves through early 2020, Walmart said in a Worker Adjustment and Retraining Notification Act (WARN) notice filed with the state last week. All affected workers have been notified, Walmart said.” [Charlotte Observer, 6/17/19]

  • Senate Majority Leader Mitch McConnell (R-KY): “Small businesses and large companies are all benefitting from these victories, and so are their workers.” … “Just this morning, Walmart announced it would raise starting wages for hourly associates, along with bonuses and an expansion of paid family leave. That is great news for more than 1 million people, including the nearly 30,000 people working at more than 100 Walmart stores across my home State of Kentucky.” [Floor Remarks, 1/11/18]
  • Sen. John Cornyn (R-TX): “Texas also proves that the effects of tax reform are more than just a one-time-only impact.” …  “And Walmart , which is the largest employer in Texas, increased starting wages, expanded parental leave, and offered financial assistance to employees who choose to adopt.” [Floor Remarks, 2/28/18]

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