Corporate tax cuts: Will workers benefit?
It’s become a mantra for Republicans: If you cut corporate taxes, businesses will pay workers more, said Jim Puzzanghera and Don Lee in the Los Angeles Times. The White House has promised that cutting corporate taxes from 35 to 20 percent will lead to such a surge in growth and wages that the average household will receive $4,000 a year more. But most economists are far less bullish. Corporate profits are already hovering near historic highs, and unemployment is near historic lows— yet raises average an anemic 2.5 percent, and employee wages as a share of the economy “have been trending down.” Most of the benefits have flowed to shareholders via dividends and stock buybacks that enrich executives, who get bonuses for higher stock prices. When White House economic adviser Gary Cohn recently asked a meeting of about three dozen CEOs how many planned to invest a tax windfall back in their businesses, only three raised their hands. “Why,” Cohn asked, “aren’t the other hands up?”
Maybe that’s why the current Republican tax bill is one of the most unpopular pieces of legislation in modern history, said Derek Thompson in TheAtlantic.com. Voters understand that the proposed tax cuts overwhelmingly benefit the wealthy, which is why only 25 percent support it. Under the Senate’s plan, nearly 50 percent of the benefits would go to the top 5 percent of earners in the first year. If lawmakers wanted a real middle- class tax cut, they could put money directly in people’s pockets with a payroll tax cut, or by expanding tax credits. Instead, they’re rewarding their corporate and billionaire donors under the guise of trickle-down economics.
Here we go again, said The Weekly Standard in an editorial. Every time Republicans try to cut taxes, Democrats cry: “You’re favoring the rich and hurting the middle class.” But our corporate tax rate is among the highest in the world, and once it drops, American companies will have more money to expand and hire. If that’s true, why don’t we put it to the test, said E.J. Montini in The Arizona Republic. The next time you see your boss, ask, “How soon after President Trump’s tax plan passes can I expect my $4,000 raise?” If your boss doesn’t drop dead laughing, you might even get a straight answer. ■