Remember all that money that giant companies kept overseas because they couldn’t pay the “crushing” taxes in the U.S.? (They would have paid the same rate companies pay for business in the U.S. minus what they pay to foreign country. Weep for them.) Part of Trump’s “Tax Cuts and Jobs Act” was a huge tax cut on corporate profits brought back to the U.S. It’s unclear how much money came back. JPMorgan says about $270 billion came back. The Commerce Department says $464 billion. Sounds like a lot, but either way its just a fraction of the $3 trillion kept overseas.
The corporations also have more cash because of a cut in their basic tax rate. The rate was cut almost in half (though the big companies had legions of lawyers and accountants making sure they would never really paying the top posted rate.) Still they made out like bandits. The tax money the U.S. took in from companies dropped by a third. That’s an immense drop and it never happened before in “good times”.
What did the companies do with the money? Did they raise pay? Did they build factories and such and hire people at good wages? Like hell they did! According to the New York Times workers at big companies got an average of a one-time bonus of $225 this year from all of Trump’s tax cuts. Overall this fall wages were half of one percent higher than a year ago (taking into account price rises) Whoopie! Jobs? The number of jobs at the biggest 1,000 companies actually dropped by 7,000 (the NYT article, again)
In the summer the respected PEW research group did a study of real wages over the decades, that is what’s happened to wages after you take into account price hikes. They found that workers purchasing power has not grown in 40 years. In 1973, just after Nixon resigned, workers averaged the same pay rate as they do today!
The corporations are swimming in money so what are they doing with it? Well for one, they’re buying back their own stock. All together they bought $1.1 trillion in their own shares so far this year. Why do that? The idea is with less shares out there each share is worth more and that will show up when stock market prices zoom up. So far the idea hasn’t panned out. As of the 12/18 selloff stock prices have wiped out all their gains for the year. So what, the companies won’t suffer. After all YOU paid for the buybacks. The U.S. government deficit (the difference from what it pays out compared to what it takes it) is skyrocketing. It’s expected to reach over a $1 trillion, way up from $665 billion in Obama’s last year