House Speaker Paul Ryan
The bad news for the corporate tax cut crowd just keeps coming. In volume 27 of Things You Won’t Read In the Financial Review, a new analysis shows how few US corporations are sharing the benefits of the Trump tax handout. A study by the progressive “Americans for Tax Fairness” — but using data from the right-wing, pro-tax cut “Americans for Tax Reform”, shows 46, or 9%, of Fortune 500 companies in the US planning to share some of the tax cut windfall with employees or customers, and the majority of that plan to do so with one-off bonuses, not permanent wage increases. Twenty large corporations have so far announced they will be engaging in share buybacks and eight of the firms have announced a total of 27,000 job cuts since the tax bill was passed. Late last week, credit card giant Visa also announced it was using its tax cut windfall (its tax rate fell 6 percentage points, it reported) for a “new $7.5 billion share repurchase program” and an increased dividend.
The ATF numbers confirm a separate poll by Reuters/Ipsos last week that showed 2% of Americans said they had received a “raise, bonus or other additional benefits” from their employer since the tax cut was passed. And another survey of economic forecasters last week found that most expected the top priority for businesses receiving that tax windfall was share buybacks and higher dividends, well ahead of capital expenditure and three times the number of forecasters who expected higher wages.
All that was coming at the same time as further cracks were emerging in the “tax cuts lead to wage rises” narrative pushed by the Trump administration and dutifully echoed by local spruikers of handouts to multinationals. You might recall some song-and-dance was made by tax cut champions of Walmart agreeing to a wage rise and a $1000 bonus for its workers, which it faced increasing competition to retain (in fact, Walmart has been lifting its minimum wage for two years now in order to retain staff). “Walmart wages hike shows the power of Donald Trump’s company tax cuts,” chirped the Financial Review. But even accepting Walmart’s link between the tax cut and the rise/bonus, a closer look revealed that not all that glitters is gold. The much-trumpeted bonus is only available in full to employees if they’ve been at Walmart for 20 years. Few workers would last ten years at an employer like that, let alone twenty. And workers who’ve been with Walmart a decade will get $400. Employees working the average job tenure of a US workers — 4.2 years — will get $250.
And here’s a cautionary tale for the Financial Review: careful what you cheer for. The GOP’s House Speaker Paul Ryan decided to trumpet the virtues of the corporate tax cut by telling Twitter about a secretary who was “pleasantly surprised her pay went up $1.50 a week.” $78 a year makes Walmart look positively generous. The backlash online was so intense, Ryan deleted the tweet. Though not before plenty of people had pointed out Ryan had been gifted US$500,000 by far-right billionaires the Koch brothers as a success fee for getting the tax cut through.
We’d never suggest that the Financial Review is spruiking handouts to multinationals because it’s been paid to by the super-wealthy. It seems to be doing it for free. In a funny way, that’s even worse.