Corporate tax cuts have long been on the wish list of American businesses, which have rightly argued that both the rates and structure of the U.S. corporate tax code hurt America’s ability to compete globally. U.S. companies are now on track to see dramatic reductions in their tax rates, thanks to the $1.5 trillion tax cut package just passed by the GOP-led Congress and signed by President Donald Trump.
Trump and GOP Congressional leaders claim this relief will spur economic growth through new jobs and higher wages. As proof, they point to a series of commitments by companies such as Boeing and AT&T to provide their workers with bonuses and more worker training.
Unfortunately, it’s far more likely that shareholders, not U.S. workers, will reap the biggest benefits from the Trump tax cuts. According to Bloomberg, for example, many major corporations reportedly told investors in earnings calls this fall that they plan to “turn over most gains from proposed corporate tax cuts to their shareholders” through share buybacks or higher dividends. The Washington Post reported in December that, among America’s 20 biggest companies, just two explicitly promised to hire more workers – and no one committed to raising wages.