Corporate tax cut enthusiasts have been quick to seize on US giant Walmart declaring that Donald Trump’s corporate tax cut has enabled it to give its workers a pay rise. Rob Scott of Wesfarmers — that’s the Wesfarmers of that discredited deal with the SDA to cut workers’ pay — was quoted today citing Walmart’s decision to lift its minimum wage from $9 an hour to a whopping $11 an hour as evidence that company tax cuts really did (as their spruikers have claimed but been unable to prove) lead to wage rises.

The head of the “G100” — which sounds like the group of major economies expanded to meaninglessness, but is apparently the Chief Financial Officers of the top 100 Australian companies — also invoked Walmart, saying “[s]hould the tax rate fall, it will reduce one of the input costs that companies face here, and how they react will depend on their circumstances, but a good company will want to ensure that it retains and rewards the employees.”

We’d have thought company tax, being a tax on corporate profits, wasn’t an input cost of any kind, but who are we to question the “G100” (actually, there are only 59 members listed on its website, but not all totals may add to 100 due to rounding).

Problem is, the Walmart pay rise doesn’t have a lot to do with the Trump tax cut, but instead because its rivals have increased minimum wages and are thus out-competing Walmart in what is now a very tight US labour market. Walmart has traditionally been corporate America’s most bitterly anti-worker employer, with, inter alia, a strict ban on unions in its workplaces, a very long history of imposing unpaid work on its staff and persistent attempts to avoid its health insurance obligations to employees. But with US unemployment at or below 5% since 2015, and possibly heading under 4%, Walmart’s entrenched hostility to its workers makes for poor recruitment strategy.

There’s also one other slight problem with the argument: Walmart just announced the closure of 63 stores, with a loss of thousands of jobs. Company tax cuts were supposed to spur increased investment, but as we’ve reported before, in fact they’re associated with an increased propensity to cut jobs. Walmart’s latest cuts fit a long-running pattern. Company tax propagandists who want to cite Walmart can’t cherrypick the consequences.

Peter Fray

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Peter Fray
Editor-in-chief of Crikey