By Hartsville Vidette Staff Reporter on Hartsville Vidette
The GOP has been furiously trying to spin their tax cut for the wealthy and corporations as a benefit to the average American worker, but their attempts are falling flat.
In February, Paul Ryan was widely ridiculed for touting the story of a secretary who was saving an extra $1.50 a week as a result of the tax cut. In the home stretch of the recent contentious election in Pennsylvania’s 18th Congressional District, Republicans were forced to abandon their message touting the tax cuts because their ads weren’t resonating.
The simple fact is that – far from putting more money in the pockets of working Americans – this bill will actually suppress wages in the long run. And the American people know it.
There have been many media reports about the absence of meaningful wage growth for American workers in recent years. This tax bill is meant to give a sop to working class people through a small short-term increase in their take home pay, instead of requiring an increase in the abysmally low federal minimum wage or providing real incentives to corporations to increase wages.
Not surprisingly, some corporations like Walmart sought positive press by offering end of the year bonuses to employees, so they could “share” in the enormous benefit conferred on the corporations through this tax bill. But the workers received a pittance compared to the benefits reaped by the corporation’s shareholders and executives.
The nonprofit organization Just Capital analyzed the 121 largest public companies that have announced how they will spend their $45 billion windfall from the tax bill. The companies plan to spend on average only 6 percent of those savings directly on to their workers. Most of that spending comes in the form of one-time bonuses.
It’s true that a $1,000 bonus can have a very real and meaningful impact on someone’s life. But few workers will actually see the full amount, and in the end, these one-time bonuses are little more than a publicity stunt and tax play. By paying bonuses, instead of raising wages, these companies contribute to wage stagnation. Bonuses are a one-time payment. They don’t need to be repeated and they don’t increase the wage base, allowing wage growth to lag behind the rising cost of living.
Similarly, Apple’s recent actions have nothing to do with increasing wages. Apple had held $78.5 billion in tax revenue outside the reach of U.S. tax authorities for years. Now, they are casting their repatriation of millions of dollars in assets as an opportunity to invest in the American economy. But that does not mean that Apple will raise the wages of its workers, because corporations are legally bound to act in the best interests of their shareholders. Corporations will only increase wages if compelled to do so by an increase in the minimum wage, or it is made worth their while through tax incentives specifically designed to increase skilled jobs and to encourage paying higher wages.
The recent tax bill provides no such incentives.
Corporations can continue to suppress wages to protect their profit margins and keep their shareholders happy. Increasing wages is considered a major factor in causing inflation. Inflation means rising interest rates, higher bond prices and lower stock prices. In short, rising wages ultimately leads to Federal Reserve action to reduce inflation and thereby suppress wages. The recent precipitous drop in the stock market was said to be the result of fears of inflation stoked by the small increase in wages recently achieved due to a tight labor market.
These corporate shareholders are the same people who benefit from the tax bill. The richest 10 percent of Americans now own 84 percent of stocks. The more affluent they are, the more they benefit.
In fact, as investment research firm TrimTabs found in a report released Wednesday, U.S. corporations have announced more than $218 billion in share buybacks, which benefit investors who continue to hold shares, as well as the company’s executives.
This tax bill was not designed to create new jobs or higher paying jobs, but to reward the wealthy with lower taxes and higher stock values.
But many of us who do benefit from this bill don’t want it. I’m a member of the Patriotic Millionaires, an organization of wealthy individuals committed to fighting our country’s growing economic inequality. That’s why we fought hard against the tax bill and will continue to do so.
We want real tax reform that reduces wealth and income disparities because our country is only strong when every American can enjoy economic opportunity and fair treatment.
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