Corporations Spend Very Few Savings From Tax Cuts On Workers, Data Shows
One of the most highly touted legislative accomplishments of President Donald Trump and Republicans is the $1.5 trillion tax cut they passed in December 2017. Conservatives and corporations alike have praised the tax cut, and publicized bonuses and wage hikes for workers to rally support in its favor.
AT&T promised bonuses of $1000 to 200,000 employees over the next year. Wells Fargo claimed to increase their minimum wage to $15 an hour. Disney announced $1000 bonuses to all of its employees. Wal-Mart linked increases to their starting wage and issued bonuses up to $1000 for some employees.
Despite the corporate washing of Trump’s tax cut, data compiled by Americans For Tax Fairness shows the windfall of money corporations are receiving from the tax cuts is not going to workers.
Only 398 out of 26 million businesses provided workers with bonuses and/or wage increases in the wake of the tax cuts (4.1 percent of workers). These businesses include only 66 out of all Fortune 500 corporations.
A very small amount of savings—approximately $6.9 billion out of $76 billion in savings—is being redistributed to workers in the form of bonuses or wage increases.
This amount is even lower than what was predicted by market analysts in a CNBC survey conducted in January 2018. Although they predicted more of the tax cut windfall would be spent on companies conducting stock buybacks from investors, which increases the value of shares in a company, they still believed 12 percent would go to workers.
Based on the data compiled so far, among Fortune 500 companies, $347 billion was diverted to stock buybacks while only $6 billion was spent on workers.
“The extensive use of tax savings for stock buybacks rather than investing to grow the business is exactly what I predicted would happen and what we saw in the similar multinational corporate tax cut fiasco more than a decade ago,” David Cay Johnston, Pulitzer Prize winner and former tax reporter for the New York Times, told Shadowproof. Johnston was referring to the tax cuts implemented under George W. Bush.
Johnston’s media outlet, DCReport, first reported that Apple paid $3 billion in repatriated taxes and received a zero percent interest loan for $35 billion, half of which is not due until 2024 and 2025.
“This was on top of a discount from a tax bill of more than $80 billion to just $38 billion,” Johnston added. “Trump and Congress, by the way, have no intention of giving you that kind of a sweetheart deal — a 57 percent or 70 percent discount on your taxes combined with an eight year interest free loan for nearly all of the reduced tax bill.”
Several polls have found similar results from workers who have experienced little-to-no benefits from Trump’s tax cuts. A poll conducted by Reuters in January 2018 found only 2 percent of workers reported a wage increase, bonus, or other benefit tied to the tax cuts. A survey conducted by PawnGuru found low-income Americans aren’t being helped by the tax cuts.
“Of our respondents who work, who are overwhelmingly low-income, 80 percent have not gotten a raise since February, 50 percent have not gotten a raise since last year, and of those who got a raise, the majority (55 percent) received an additional $50 or less per month,” Jordan Birnholtz, co-founder of PawnGuru.com, shared. “That amounts to a quarter an hour increase, not exactly significant or attributable to the tax law.”
According to the Tax Policy Center, the majority of gains from Trump’s tax cuts will be enjoyed by the wealthiest families and individuals in the United States. Those with an annual income of less than $25,000 will see an estimated savings of $60 in 2018 while households with over $3.4 million in annual income will experience an estimated savings of $193,380.
Wages have remained stagnant since Trump became president, with tax cuts having no impact on growth.
On the surface, corporate announcements in response to Trump’s tax cuts appear to be a win for workers. But beyond the public relations efforts, these companies continue to treat workers poorly as corporate executives reap the majority of tax cut benefits.
Disney has withheld bonuses from all union members involved in wage negotiations, citing the bonuses are part of the negotiations involving 41,000 employees. A coalition of unions has pushed Disney to stop withholding the bonuses as part of the negotiations.
“At a time when Disney expects a yearly windfall of $1.6 billion, Disney is discriminating against 38,000 of some of its lowest paid cast members,” said Angie McKinnon, treasurer of Unite Here Local 737. “Using the $1,000 bonus to force cast members to accept low wages amounts to extortion.”
Negotiations for wage increases between Disney and the unions are still ongoing, as Disney withholds bonuses from union members.
Less than 24 hours after Walmart touted their bonuses and wage increases, they announced the closure of 63 Sam’s Club stores resulting in the layoff of over 10,000 workers.
Walmart’s publicized bonuses did not reveal that only employees with at least 20 years of service would receive the full $1000 bonus. Walmart’s expected savings from the Trump tax cut is $2.2 billion, but less than one-third of that is likely to go toward bonuses and wage increases.
“Walmart is using the majority of the corporate tax windfall to reward shareholders like the Walton heirs — the richest family in United States — instead of making a real investment in its workforce,” Cyndi Murray, a Walmart employee and member of the worker-led group Our Walmart, declared. “The company’s wage increase in January didn’t go far enough. It leaves millions of Walmart associates with an annual income still thousands of dollars below the poverty level, while redirecting millions in tax savings to a family that’s already wealthier than about 40% of Americans combined.”
Though AT&T credited Trump for bonuses to 200,000 employees, unions had already negotiated for those bonuses before the Trump tax cut was passed.
AT&T has also announced a series of layoffs: 1300 employees in December 2017 and another 700 in February 2018.
Since 2007, AT&T has shut down 44 call centers and eliminated 16,000 call center jobs, despite the company recording billions in profits and spending substantial money on stock buybacks to increase the wealth of corporate executives. The company’s estimated tax savings this year is $2.1 billion, ten times more than the $200 million its proposed bonuses will cost.
AT&T has recently faced public scrutiny for paying $600,000 for a one-year contract to retain Trump lawyer Michael Cohen as a political consultant. Critics have cited the payment appears as corporate bribery in favor of policies that would serve the interests of AT&T, which has sought to merge with Time Warner.
On May 11, several thousand workers from unions covered by AT&T’s Midwest and Legacy T contracts voted in favor of a strike.
“AT&T paid six-figure sums to a shady consultant, who provided nothing of value to the company but [it’s] unwilling to commit to family-supporting jobs in the communities that it serves.” said Linda L. Hinton, Vice President of Communication Workers of America District 4, in a statement. “If AT&T refuses to protect the good jobs that support our families and communities, our members will take action. AT&T promised to invest in its U.S. workforce if the GOP tax bill passed. We’re going to hold them to that promise, even if it means going on strike.”
Shortly after Trump’s tax cuts passed, the Los Angeles Times reported the Wells Fargo communications team repeatedly contradicted themselves on whether their wage increases were tied to Trump’s tax cut. The big bank is likely to save $3.7 billion annually from the tax cut, with only $268 million going toward wage increases.
In January 2018, Wells Fargo announced they plan to close 800 bank branches by 2020. Employment experts and a bank CEO told CNBC in December 2017 that Wells Fargo’s wage raises were already in the works—done too quickly to have been linked to the tax cut bill—and are part of a trend that has seen cities raise minimum wages and other banks compete for talent with better minimum wage positions.
Several other corporations announced no plans to provide workers with bonuses or wage increases in the wake of Trump’s tax cut, despite saving billions of dollars annually. For example, Koch Industries, Kimberly-Clark, Exxon Mobil, Cisco Systems, and several other corporations promised no tax cut benefits to employees.
Overall, corporate tax rates were slashed from 35 percent to 21 percent, though many corporations paid much less than that due to a combination of offshore tax havens, special tax breaks, issuing stock options to corporate executives, and government subsidies.
The Congressional Budget Office reported in 2017 that the average corporate tax was 29 percent. Between 2008 to 2015, several companies paid no federal taxes, including General Electric, Duke Energy, and Priceline.com (now Booking Holdings), according to a study from the Institute on Taxation and Economic Policy.
The Trump Administration has not been transparent in providing the public with data and information on how the tax cuts are being utilized by corporations across the country. Several unions have requested detailed information from corporations on how the money was invested, and what funds, if any, ares being used to improve the wages and lives of workers.