It’s becoming increasingly clear that the Republican tax scheme is going to pass. And already, corporate executives are undermining the GOP’s claim that their gigantic corporate tax cuts will be funneled directly into job-creating investments in the United States.
Some of the country’s largest and most profitable companies are saying that they’ll be sending tax savings straight to the shareholders. Pfizer, Coca-Cola, and IT giant Cisco have all said that they intend to reward shareholders with increased dividends and lucrative share buybacks, Bloomberg reported Wednesday.
“We’ll be able to get much more aggressive on the share buyback,” once the tax plan is passed, Cisco CFO Kelly Kramer told Bloomberg.
Of course, this shouldn’t surprise anyone. The Trump administration and GOP leaders have been going on and on about how their tax cuts and the tax repatriation holiday that allows companies to bring their trillions in offshore cash back at a bargain rate will spur unprecedented rates of economic growth and job creation.
But CEOs have been telegraphing their true intentions for a long time.
On an earnings call a year ago, Cisco, which has $58 billion stashed abroad, was already talking about how corporate tax cuts would allow the company to hand out buybacks and ramp up mergers and acquisitions, The Intercept reported in January. Hewlett Packard, with $47 billion in overseas profits, was also boasting about how any tax savings would go straight to shareholders.
The last time Republicans passed a tax holiday for overseas profits, the 15 companies that benefited most ended up cutting more than 20,000 net jobs and curtailing research investment. Instead, they pushed their cash piles into their shareholders’ pockets.
Earlier this month, at a Wall Street Journal event for corporate CEOs featuring Trump’s top economic advisor (and former Goldman Sachs executive) Gary Cohn, the moderator asked the high-powered audience: “If the tax reform bill goes through, do you plan to increase investment—your company’s investment, capital investment?”
Just a few hands went up. A flummoxed Cohn asked, “Why aren’t the other hands up?”
CEOs are so emboldened these days that they don’t even feel compelled to offer the typical obligatory bromides about job creation and investment.
The GOP tax plan is already a naked redistribution of wealth to the upper class—a ploy that will ultimately be funded on the backs of the middle and working classes. A share buyback bonanza will only further enrich those who can afford to invest in the stock market—the wealthy and upper middle class.
The modern corporate strategy is to immediately maximize profits by any means available—be it through cutting labor costs or limiting long-term investments or securing tax cuts in Congress—and then funnel those profits to the shareholders, who will reward the CEO with a hefty bonus. It is not, as Republicans would have you believe, to build new U.S. factories or lift up wages for employees.
Just listen to the CEOs.
Tax Cuts for the rich. Deregulation for the powerful. Wage suppression for everyone else. These are the tenets of trickle-down economics, the conservatives’ age-old strategy for advantaging the interests of the rich and powerful over those of the middle class and poor. The articles in Trickle-Downers are devoted, first, to exposing and refuting these lies, but equally, to reminding Americans that these claims aren’t made because they are true. Rather, they are made because they are the most effective way elites have found to bully, confuse and intimidate middle- and working-class voters. Trickle-down claims are not real economics. They are negotiating strategies. Here at the Prospect, we hope to help you win that negotiation.
(CQ Roll Call via AP Images) Senators Mark Warner and Elizabeth Warren talk before the start of a Senate Banking, Housing and Urban Affairs Committee hearing in February. trickle-downers_35.jpg D espite Republican leaders’ best attempts to convince Senate Democrats from red states like Indiana, West Virginia, and North Dakota to vote for repealing the Affordable Care Act, cutting entitlements, and enacting sweeping tax cuts for the rich, congressional Democrats have remained united. That unanimity—along with a heaping dose of presidential ineptitude—has left the GOP’s legislative agenda largely unaccomplished 11 months into the Donald Trump administration. Alas, the congressional Democrats’ spine couldn’t stay stiff forever. So what’s the straw that broke the party’s back? Wall Street, of course. On Monday, news broke that Senate Banking Committee Chair Mike Crapo had struck a deal with a cadre of Wall Street friendly Senate Democrats to roll back regulations, including key parts of...
(The Kheel Center for Labor-Management Documentation and Archives)
(The Kheel Center for Labor-Management Documentation and Archives) Striking dressmakers take a break in a diner around 1955. T he 1970s is often pointed to as the decade in which the power of labor unions first began its precipitous decline. And it’s true. On the face of it, labor union density took a hit in certain sectors during this economically tumultuous decade. Many labor historians have argued that this decline was brought about not only by economic shifts, but also by the complacency of union leadership and the stereotypical union member—the white blue-collar man—losing interest in collective institutions. However, in her new book Knocking on Labor’s Door: Union Organizing in the 1970s and the Roots of a New Economic Divide , Lane Windham argues that this is a myopic view of labor history—one that papers over important worker-led organizing during that decade. Windham tells the stories behind a surge of organizing drives in sectors like retail, services, shipbuilding, and...
(AP Photo/Charlie Neibergall) AFSCME President DannyHoman speaks during a rally on January 10, 2012, after then-Governor Terry Branstad's Condition of the State address at the Statehouse in Des Moines, Iowa. T here’s not a whole lot of good news for the American labor movement these days. The Republican Party has full control of the federal government and is implementing a radically anti-union agenda. Aggressive union-busting continues to stanch promising organizing drives . Union membership is at a historic low. And public-sector unions—the remaining pillar of organized labor—are preparing to take a big hit as the Supreme Court is soon expected to enable beneficiaries of unions contracts to stop paying dues. But last week, there was some rare good news out of Iowa. In the face of a GOP onslaught against workers, the state’s public-sector union members overwhelmingly voted in favor of recertifying their respective unions. The message was clear: Don’t touch our unions. Since voting...
(Press Association via AP Images) Apple CEO Tim Cook P resident Trump’s push to slash the corporate tax rate from 35 percent down to 20 percent, and his ludicrous claim that doing so will give the average worker a $4,000 raise, has drawn a great deal of scrutiny—and rightfully so. It’s a trickle-down fabrication to build support for a bill that will further enrich CEOs and shareholders, and do nothing for ordinary Americans. But the only colossal corporate giveaway in the plan includes more than the mere slashing of rates. Quietly, Republicans are also pushing a territorial taxation provision that would make it far easier for multinational corporations to avoid paying even a new 20 percent rate by providing further incentive to stash profits in offshore tax havens. Currently, the federal government uses a “worldwide” taxation system for corporations, which taxes both domestic and foreign profits. This system is badly flawed because multinationals are able to indefinitely defer...