Since the passage of former President Donald Trump’s 2017 tax law, a striking trend has emerged among the nation’s largest corporations.
According to a recent analysis by the progressive watchdog group Accountable.US, the 15 largest beneficiaries of this tax reform have collectively spent a staggering $839 billion on stock buybacks and dividends.
This figure sheds light on how these corporations have chosen to utilize the financial windfall provided by the tax cuts.
The Context of the Tax Law
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The 2017 tax law was touted as a way to boost the economy, promising benefits for both corporations and the average American. The corporate tax rate was slashed from 35% to 21%, which was expected to lead to increased investments, higher wages for workers, and overall economic growth.
However, as we delve into the findings, it becomes apparent that the reality has not quite matched the promises made.
Who Are the Major Beneficiaries?
The report highlights major corporations including Verizon, Walmart, AT&T, Meta, Home Depot, Intel, Comcast, Walt Disney, Visa, Capital One Financial, Lockheed Martin, Amazon, Lowe’s, United Parcel Service (UPS), and Texas Instruments. Together, these companies have witnessed a significant surge in profits, totaling over $257 billion since the law’s enactment.
Where Did the Money Go?
Rather than investing in their workforce or reducing consumer prices, these corporations have largely opted to enrich their executives and shareholders.
The analysis reveals that over $464 billion has been spent on stock buybacks, while $374 billion has gone towards dividends. This trend raises concerns, as stock buybacks have been linked to mass layoffs, leaving many workers in precarious positions.
The Promised Benefits
Promoters of the tax law assured the public that households could expect a boost in income—reportedly up to $4,000. However, research has shown that workers earning less than approximately $114,000 in 2016 saw little to no change in their earnings. Instead, top executives enjoyed significant salary increases, leading many to question the effectiveness of the tax cuts for the average worker.
A Call for Change
As the expiration of key provisions of the Trump tax law approaches at the end of next year, there is an ongoing debate in Congress regarding potential extensions. Vice President Kamala Harris has proposed raising the corporate tax rate back to 28%, while many Republican lawmakers, buoyed by corporate lobbyists, are advocating for new tax breaks.
Accountable.US President Caroline Ciccone voiced her concerns, stating that continuing the corporate tax breaks would do little for everyday Americans. Instead, she emphasized the need for billionaires and corporations to contribute their fair share, arguing that the previous tax cuts primarily benefited a small group of wealthy investors.
Bharat Ramamurti, former deputy director of the National Economic Council, echoed this sentiment, describing the tax cuts as a failed approach that primarily led to increased executive compensation and shareholder payouts.
He urged Congress to take this opportunity to reassess how to generate more revenue from corporations and the wealthy.
Conclusion
As we reflect on the implications of the 2017 tax law, it becomes clear that the benefits promised to the working class have largely fallen short.
With a critical juncture approaching in tax policy, it’s essential for lawmakers to consider the broader economic landscape and the needs of everyday Americans. The choices made in the coming months could significantly shape the financial future for both corporations and individuals alike.