Corporate Tax Cuts Promote CEO Pay Raises and Stock Buybacks, Not Jobs
Corporate tax cuts would be a major windfall for American corporations. For American workers, perhaps not so much.
The 92 companies examined saw median job growth of negative 1% over an eight-year period, compared to 6% across the entire U.S. private sector. Moreover, half of those firms eliminated jobs during that time, downsizing by a combined total of 483,000 jobs.
At the same time, average CEO pay among the 92 firms rose by 18%, compared to a 13% increase across the entire S&P 500. Private sector worker pay during that time increased by just 4%. CEOs at the 48 companies that cut jobs did especially well, bringing in $14.9 million on average in 2016 compared to $13.1 million across the S&P.
"We...need a tax reform debate that dispenses with the fantastical notion that corporate tax cuts will automatically create good jobs for American workers,"
I suspect we'll have that conversation about the time we dispense with the idea that we can solve almost any economic problem by simply "taxing the rich".
So not in either of our lifetimes.
Read the article then, as it is not about taxing the rich, it is about the motor that drives our economy, the workers of America, getting more considerations than they are getting under this Tax Bill, instead of giving our hard earned pay back to corporations.
My comment was not intended as a reflection on the article. It was more to point out the baseless blind beliefs that permeate both ends of the political spectrum.
It is highly unlikely that this tax cut will create more jobs. It is also unlikely that it will actually be damaging to middle class workers.
It's certainly fair to question the wisdom of a tax cut intended as an economic stimulus during a period of full employment and 3-4% GDP growth. But the history of American govt is one of questionable decisions.
JackTX,
Thanks for further clarifying your point.
I agree with much of what you're saying. A couple of things about Middle Class workers. The permanency of the cut given is relevant; another, the sheer difference of preference given to, yet again, corporations, and Wall Street. I haven't seen the case made for either of those, that have them turn their profits back to the very engine that creates the fruits of the labor. I truly see it as poor, even hurtful maintenance.
No worries.
Thanks.
I'm not so sure. The Reagan tax cuts were intended to be permanent, but undone by Clinton within a decade. Tax rates change all the time, so worrying about what happens in 2026 seems a bit like worrying I won't have a fashionable wardrobe in the year 2485.
We need a corporate tax cut, and let me tell you why. It has absolutely zero to do with jobs or trickling down or growth or anything of that sort...none of which it's going to do anyway. It's about playing defense. It's about keeping businesses in the US, and creating an environment where new businesses want to start.
Our corporate rate is the highest in the developed world. Germany's is 15%. Ireland's is 12.5%. The world average is 22%. Our top rate is 39%...which matches the economic powerhouses of Argentina, Equatorial Guinea, and Chad. For years we've seen big multinationals move overseas and/or refuse to bring the money they make overseas back home. Businesses can become global very easily now, so the competition is much greater than it was when our current tax rates were drafted.
So I'm not so concerned about that. It's a "stop the bleeding" measure, and I think it's in the long term best interest of the average American.
Yeah....but it's not more harmful than any of the other $150 billion/yr government screw ups. It's a pretty low standard, I realize. This one at least lets regular people keep a little more of their own money.
Stopping the bleeding is appropriate, and imo may be more effectively applied by greasing the motor.
A salient point where we may narrow a difference of opinion is with the preference given to corporations, rather than average Americans. I say this not only because of the Tax break difference; but, as well to the basic misassumption that not maintaining the engine that drives the economy is adequate. This engine already being on an uphill climb due much cheaper labor overseas, is in dire need of more than a mere tune-up, it needs an overhaul. The Tax Bill up is barely a bandage, especially in comparison to corporate concerns.
Hate to rain on your little pity party, but...
President Trump has already created more new manufacturing jobs than Obama did in his entire 8 years! And he did it by flushing Obama regulations down the toilet!!
Hate to break it to ya,
But this article is about The current tax Bill. The deregulation article must be somewhere else.
My comment was directly related to your statement, and how deregulation affects the economy.
Did you oppose the Reagan and or Bush41 tax cuts too?
Institute for Policy Studies, a left-leaning think tank
So you don't refute the findings then.
Gotchya, thanks.
:~)
That name when it comes to tax issues is refutation enough. They have never been right about anything when it comes to the economic impact of tax cuts.
Corporations make investments (human or machine) when there is high demand for product, thus a need to increase output. Only!
If a corporation has money but no need to increase output, it will either bank the money or distribute it to management / shareholders.
Duh...
That is probably one of the lowest thought comments I've ever seen you make, and that is saying something!
Your comment assumes that a corporation is at it's highest value that it can possibly reach, therefore any further investment in it is futile.
Here is your assignment bob... Name any corporation in the world that has reached it's ultimate earning potential...
(Hint)... To reach that goal, it would mean that every person in the world is purchasing the corporations product at the maximum disposable income that the person has... good luck, you have one month to complete your assignment.
Caveman stick to discussing the article, don't discuss other members.
Ok.
You are assuming that the company has a monopoly and that everyone in the world will or wants to buy that company's product(s). That is the only way of getting to the point that a company will only increase its output when it feels like it and then give the money to the shareholders. Most companies in the real world are constantly expanding to meet demand unless and until the demand for their product(s) drop off, or until they run out of money and cannot get more. For example, just look at the history of Sears Roebuck.
No.
No.
No.
Other than that... we agree...
When nearly everything on the shelves at every big box store is manufactured abroad by workers getting paid pennies per hour, manufacturing will not be coming back. That is the only significant way to fuel American economic growth, and it’s off the table until the rest of the world deals with their own income disparities - to the point where it finally stops making sense to ship widget parts half way around the world and back before hitting those shelves.
President Trump and the Republicans have already proved you wrong.
GDP looks to hit 4% this year, that is compared to 1.5% under Obozo.
additionally,
President Trump is about to make the U.S. corperate tax rate in line with the rest of the world, making it feasible to operate in the U.S. again!
You should be getting up off your partisan ass and worship the name Trump! He is making America great again!!
President Trump is about to make the U.S. corperate tax rate in line with the rest of the world, making it feasible to operate in the U.S. again!
So you think other governments won't also do the same?! Pppphhhhtttt......
That's right, lets just continue to give the paychecks we work so hard for back to corporations so they may pay out gigantic bonuses and buy back stock. /s/
They may. So, we need to match them.. The end game will be how efficiently we spend our tax revenue, vs. the rest of the world.
Yeah, like THAT has EVER happened in America!
get real!
I'm not, but the government is taking your money any ways and giving it to corporations.
Really? What percentage of the money the federal government takes away from me does it then turn around and give to the evil corporate America?
Oh how quickly they forget...
The Great Recession (2007–2012) was a period of general economic decline observed in world markets during the late 2000s and early 2010s. The scale and timing of the recession varied from country to country. [1] [2] In terms of overall impact, the International Monetary Fund concluded that it was the worst global recession since the 1930s (the Great Depression ). [3] [4] The causes of the recession largely originated in the United States, particularly related to the real-estate market, though choices made by other nations contributed as well. According to the U.S. National Bureau of Economic Research (the official arbiter of U.S. recessions) the recession, as experienced in that country, began in December 2007 and ended in June 2009, thus extending over 19 months. [5] The Great Recession was related to the financial crisis of 2007–08 and U.S. subprime mortgage crisis of 2007–09. The Great Recession resulted in the scarcity of valuable assets in the market economy and the collapse of the financial sector (banks) in the world economy. The banks were then bailed out by the U.S. government. [6] [7]
~WIKI~
See that last line, "bailed out by the US government"? That's not money that magically goes to the government from some unknown source, it came from you and me, and everybody else on this forum.Middle America paid for it.
The majority report provided by U.S. Financial Crisis Inquiry Commission , composed of six Democratic and four Republican appointees, reported its findings in January 2011. It concluded that "the crisis was avoidable and was caused by:
Please DO explain WTF the GDP has to do with the origin of products on Big Box shelves.
The abundance of foreign made products in our shelves illustrates the trade deficit and Trump's not doing too hot.
What's your point?
Manufacturing is up all across the board, the economy is sky high and going higher...
And you want to argue about Wal-Mart selling a pair of underwear made in the Honduras?
By what measure? Not by employee pay...
That is exactly a perfectly valid criticism; what is the benefit in that? Middle Class workers pay reflects it too.
My point is that you are comparing apples and artichokes. I note that you have NO answer to my question.
As it has been since 2010. The POINT is, WHY are the VAST MAJORITY of products on our shelves made elsewhere.
By what metrics?
The ONLY 'sky high' metric I see is the stock market [corporate income/value] and Trump STILL alleges that they need MORE.
No, I'd rather talk about Walmart selling houseware, sporting goods, bikes, TVs, cameras, DVRs, computers and phones ALL made elsewhere.
Or how about Home Depot selling Grills, lawn mowers, snow blowers, compressors, pumps, lighting and tools ALL made elsewhere?
Well, now that Republicans, and President Trump, are making it less costly to produce their products in the U.S.A. We should start seeing much more "Made in the U.S.A."
Thank God for President Trump!
I hope so. I, once, only bought Made in U.S. merchandise, but had to quit that. Maybe, it will return.
Must have missed it, when did that happen?
I believe the vote will happen by this Friday. It will be a party line vote, so the Democrats will lose.
Well, now that Republicans, and President Trump, are making it less costly to produce their products in the U.S.A.
In Mexico, factory workers don't make enough to afford a place to live, so they and their families live in cardboard boxes outside of the factories that used to be in the US. In China, workers pull excessively long and low paying shifts, and live in dormitories where the otherwise empty rooms have walls that are just lined with bunk beds. They started lining the building exteriors with nets to cut down on the number of suicides, because so many workers were leaping to their deaths. This is what you think we are going to compete with?
Not that I give a flying fuck how a family in Mexico lives, but, could you provide a link to what you claim?
"Race to the bottom..."
could you provide a link to what you claim?
I'm not certain which politician I heard make that claim, but I had no reason to doubt their observations on the ground when they went to visit an auto manufacturing plant that moved from the US to Mexico. If you are skeptical that Mexican factory workers earn anywhere from $7/day to $3/hr doing the work once done by Americans for $20/hr+/-, then perhaps you should just google it yourself. It's not difficult.
Not that I give a flying fuck how a family in Mexico lives
That explains why you have no idea what I'm talking about.
I didn't make the claim, you did.
But ok, I'll google it anyway, since your to lazy...
$5.50 an hour... hell of a lot more than the bullshit you are spouting... So then I have to wonder about housing prices, vs. the cardboard box you are claiming...
Not bad for $41,000...
Now I forgot what we were arguing about, but whatever it was, I'm sure I won.
While you continue to fellate your master Trump, this is what we are competing against.
Dale Evans, the owner of Evco Plastics, is not ashamed to admit that recently he’s been hiring more people in Mexico than in Wisconsin — or Dongguan, China.
In the last two years, Evco has added 100 people to its three Mexican plants, and has been hiring more slowly in its five U.S. facilities. Meanwhile, the company is shrinking two Chinese plants into one.
But Evans says that being able to give clients the option of getting their plastic parts made in Mexico more cheaply has allowed him to move much of his 500-member staff in Wisconsin and Georgia to higher-skilled tasks, such as programming robots.
“The easy things — people picking things up and putting them in boxes — that [work] left,” said Evans. It’s too expensive for him to employ rote manual laborers in America.
He has instead invested in training his employees to maintain huge, potentially dangerous robots handling plastic parts. “The difficult things you can do with machinery, that stayed.”
The shift is driven in part by labor costs.
Evans says he used to pay Chinese workers $1 an hour, but now pays them closer to $3 per hour. In Mexico, he says, he now pays a typical plastics assembler around $4 per hour, which is just a dollar more than what he paid when he first set up shop there in 2001.
“It’s just gotten cheaper in Mexico,” Evans said.
One of the workers who has benefited is Tania Berenice Salazar, a 25-year-old from Monterrey. The single mom was working as a cashier earning about $1.60 per hour before she got an entry-level job packing up plastic materials at Evco in 2012.
Now she supervises other packagers and makes about $1.80 per hour, even as the peso has plummeted. That’s significantly above the minimum wage in Mexico of around $4 per day.
So, I see you don't want to talk about auto manufacturing any more, eh?
Fine, whatever.
Lol - the article I linked is specifically about auto manufacturing.
Uh huh...
I’m going to let you in on a secret - there are a lot of plastic parts in cars.
You’re welcome.
I'm going to let you in on a secret - we were discussing an automotive factory, you moved the conversation to a plastics factory, yes the plastics may be used in cars, but it is not the same work, it is not the same factory. Now, if you are smart enough to discuss the employee's that install the plastic parts in the cars, then go for it. I don't think you can at this point.
Let me break it down into terms that you can understand... We were talking about a Burger King store that sells the Whopper, then, for whatever reason, you started talking about the ranch where cows are raised...
You need to focus...
Me.
You go from line staff to a supervisor, and get a raise? No Brainer!!
Seeing as you are too lazy to actually click on the link where the plastics quote was taken from, I'll provide a little more of the article for you:
As she spoke, two nearby plastic injection robots were loudly stamping out pieces of dashboards for Mexican-made Kia sedans and lamp fixtures. The drab Evco factory floor in Monterrey sounds like the inside of a washing machine.
U.S.-supplied raw materials account for 60% of the cost of the plastic incubators and ATV parts the company makes in Mexico. For Evco’s China plant, the figure is just 15%.
You go from line staff to a supervisor, and get a raise?
No Brainer!!
No comment ... lol.
That's a 12.5% wage hike, which most likely was pretty significant. We don't know the cost of living, so we don't know what those wages are worth in absolute terms.
The question that should be asked is if the rate is lowered are the loopholes going to be closed? IF the loopholes are closed, then these corporations like AT&T and Exxon that are paying less than 20% now will pay more than their current effective rates of 8.1% (AT&T) and 13.6% (Exxon). Keep that in consideration before claiming that the marginal tax rate cuts won't benefit workers.