Shocker: Republican tax cuts proving huge benefit to rich people; ordinary people, not so much

Paul Waldman:

When Republicans put together their tax bill last year, it was not much of a surprise to see that its centerpiece was a gigantic corporate tax cut, lowering the statutory corporate rate from 35 percent down to 21 percent. This cut accounted for about $1 trillion of the bill’s total $1.5 trillion cost, but Republicans said it really wasn’t about helping corporations at all.

No, the real target was the workers: Corporations would take the money and use it to create new jobs and raise the wages of those working for them, as trickle-down economics did its magical work.

Democrats, on the other hand, said it was a scam. They charged that workers would see only a fraction of the benefits, and instead corporations would use most of their windfall for things like stock buybacks, which increase share prices and benefit the wealthy people who own the vast majority of stocks. [emphases mine]

And of course, most of the news media treated this argument in the standard he said/she said manner: Republicans say this, Democrats say that, and the truth lies in some secret location we may never actually reach.

Well, it has been only two months since President Trump signed the bill into law, and we’re already learning what anyone with any sense knew at the time: Everything Democrats predicted is turning out to be right. Let’s look at this report in the New York Times, which describes how stock buybacks are reaching record levels…

While the Times does note that some businesses are raising salaries, the piece concludes that “much” of the savings from the tax cuts is going to these buybacks, with this big-picture effect:

Those so-called buybacks are good for shareholders, including the senior executives who tend to be big owners of their companies’ stock. A company purchasing its own shares is a time-tested way to bolster its stock price.

But the purchases can come at the expense of investments in things like hiring, research and development and building new plants — the sort of investments that directly help the overall economy. The buybacks are also most likely to worsen economic inequality because the benefits of stocks purchases flow disproportionately to the richest Americans.

This is exactly what Democrats warned would happen. How could Democrats have been so clairvoyant? Do they own a time machine?

Well, no. They applied logic, looked at data and understood history. Republicans, on the other hand, were spinning out a ludicrous fantasy with no basis whatsoever.

I swear, hard to argue against the proposition that today’s GOP is just one giant con job.  But, hey, Paul Ryan is kicking poor people out of their hammock thereby making their lives better.

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About Steve Greene
Professor of Political Science at NC State http://faculty.chass.ncsu.edu/shgreene

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