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The GOP Tax Scam: Corporations Get Richer, Wages Flat, Jobs Lost
The Republican tax scam in late 2017 was known by all intelligent people to be a massive giveaway to the wealthiest Americans and largest corporations. Most everyone else besides them would eventually see their tax burden INCREASE. If you're reading this web site, you know this already so instead let's share some new analysis from mid-November on the impacts after one year.
Nearly a year after the tax cut, economic growth has accelerated. Wage growth has not. Companies are buying back stock and business investment is a mixed bag.
Republicans sold it as a refashioning of the incentives in the American economy — one that would unleash more investment, better efficiency and higher wages, along with enough growth to offset any revenue lost to the government from lower tax rates.
Some Republicans knew this was a flat out lie and solely cared about the giveaway to their donors. This we know. Other Republicans who voted for it are too stupid to understand and should never be in a position of power.
Nearly a year after the law took effect here’s what the numbers tell us, formatted as the Republican claim/lie and then what happened in bold.
1) Proponents of the tax overhaul said it would supercharge the recent lackluster pace of business spending on long-term investments like buildings, factories, equipment and technology. Such spending is crucial to keeping economic growth strong.
...there’s little clear evidence that it is drastically reshaping the way in which most companies invest and spend. The results of a survey published in late October by the National Association for Business Economics showed that 81 percent of the 116 companies surveyed said they had not changed plans for investment or hiring because of the tax bill.
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2) Cheerleaders for the tax cut argued that the heart of the law — cutting and restructuring taxes for corporations — would give the economy a positive bump, giving companies incentives to invest more, hire more workers and pay higher wages.
....the money companies saved through tax cuts would merely increase corporate profits, rather than trickling down to workers.... a flood of payouts to shareholders, both as buybacks and dividends. Such payouts are expected to hit almost $1.3 trillion this year, up 28 percent from 2017.
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3) Supporters of the tax cuts, like Mitch McConnell, repeatedly claimed the bill would increase economic growth enough to offset the decline in tax receipts.
Despite a remarkably strong economy, the fiscal health of the United States is deteriorating fast, as revenues have declined sharply. The federal budget deficit — the gap between what the government collects in revenues and what it spends — rose to $779 billion in the 2018 fiscal year, which ended Sept. 30. That was a 17 percent increase from the prior year. A broad variety of analysts attribute the widening deficit to the tax cuts...
It’s highly unusual for deficits and borrowing needs to grow this much during periods of prosperity. The growing budget gap means the Treasury must borrow more to keep the government running. The Treasury expects to borrow... 145 percent higher than last year.... highest level of borrowing since 2010, when the American economy was struggling to recover from the great recession.
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4) ... hundreds of companies — from large multinationals to small manufacturers — announced that they would be using some of their windfall from the law to give one-time bonuses to employees. Others said they would raise minimum wages across the company, or expand worker benefits. Trump and Republicans hailed those announcements as evidence that the law’s benefits were flowing substantially to workers.
Data from large public companies, however, suggest that most workers received relatively small shares of their employers’ corporate tax savings. The nonprofit research group Just Capital, which is tracking 1,000 large public companies’ reports of how they are spending their tax cuts, calculates that the typical worker at one of those large companies has received about $225 this year.
Wage growth has yet to pick up when accounting for inflation. In September, the Labor Department reported that inflation-adjusted wages had risen 0.5 percent from the year before. That’s a slower rate of growth than the prior year.
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5) Many companies also said they would use tax savings to create jobs.
Just Capital research finds that, since the tax cuts were passed, the 1,000 largest public companies have actually reduced employment, on balance. They have announced the elimination of nearly 140,000 jobs — which is almost double the 73,000 jobs they say they have created in that time. About half of those net losses came from companies in the restaurant and leisure industries, the analysis found.