Wednesday, January 03, 2018

Trump Tax Breaks Not Trickling to Workers

According to the White House's own compilation and more recent announcements, only 16 companies in the S&P 500 have responded to the tax overhaul by raising wages, handing out bonuses or improving employee benefits. The wage hike and additional charitable giving will cost Wells Fargo about $215 million in 2018, according to investment bank KBW. That represents just 5% of Wells Fargo's total estimated earnings benefit from the tax overhaul, KBW estimates. "It's a token compared with what companies are actually saving. Where is the rest of the money going?" said Jeffrey Sonnenfeld, senior associate dean at the Yale School of Management.

More

So 484 out of 500 are passing NOTHING to the workers and Wells is only passing on 5% of their savings. If we extrapolate that means about 0.16% of the tax savings will trickle down while 99.84% will not.

Comments

I want an Oompa Loompa and I want it NOW!!!

-Veruka Hatter5183

#1 | Posted by Rightocenter at 2018-01-02 05:32 PM

No one with any brains really thought it would

#2 | Posted by PunchyPossum at 2018-01-02 11:47 PM

#1 going with the jealousy thing? Boaz would be proud. Pretty weak defense for the Plutocracy though.

#3 | Posted by BruceBanner at 2018-01-03 10:07 AM

The lack of announcements doesn't matter to anybody who is attempting to keep score anyway. Folks against this tax bill don't believe the companies who announced an increase in benefits/wages did so as a result of the new bill. They were going to do it anyway.

And perhaps they are right but if that number turned into 160 companies....it still wouldn't matter.

And it's way too early to keep score on it. Fundamentally, I disagree with the tax bill as it's a giveaway to the wealthiest that will generate more deficits.

but.....there is no point in keeping score on this.......yet.

#4 | Posted by eberly at 2018-01-03 10:22 AM

My company said the tax break won't have an impact because they're not paying any taxes right now.

#5 | Posted by Pirate at 2018-01-03 03:19 PM

"My company said the tax break won't have an impact because they're not paying any taxes right now."

Working for the Trumps?

#6 | Posted by danni at 2018-01-03 03:28 PM

I think it will trickle down, but it will mostly be in the form of some sort of performance-based restricted stock or bonuses. There's not really any reason to pay more for a widget (or a worker) than you currently do...unless they will or have the potential to offer more to the firm.

#7 | Posted by madbomber at 2018-01-03 04:44 PM

"And it's way too early to keep score on it. Fundamentally, I disagree with the tax bill as it's a giveaway to the wealthiest that will generate more deficits."

It's certainly a possibility. The Kennedy and Reagan tax cuts both increased total receipts...whether that happens again has yet to be seen. The difference with the current tax plan is that it appears to accept an increased deficit as an acceptable side effect. Reagan had never intended for deficits to increase, and regarded the increases as a serious disappointment.

#8 | Posted by madbomber at 2018-01-03 05:02 PM

Working for the Trumps?

#6 | Posted by danni at 2018

Please, when high corporate tax rates have been cited as a defense for companies that offshore operations, you've parroted the same line that most corporations don't pay taxes anyway which makes that excuse a red herring.

enjoy your red herring.

#9 | Posted by eberly at 2018-01-03 05:12 PM

And now we have the great tax deform: Mocking America into some strange "greatness" again?

#10 | Posted by bornfree at 2018-01-03 05:58 PM

effects of tax cuts on government returns

#11 | Posted by BruceBanner at 2018-01-03 07:03 PM

Profits are not being passed on to workers, this is fact.

Hedrick Smith, a seminal journalist, points out ...

In fact, economy-wide, "trillions of dollars that could have been spent on innovation and job creation in the U.S. economy over the past three decades have instead been used to buy back (company) shares for what is effectively stock-price manipulation," economist William Lazonick reported in the Harvard Business Review in late 2014.

The contrast between what business does today and what it used to do is stunning.

In a study of hundreds of major U.S. companies, tellingly titled "Profits Without Prosperity," Lazonick found that in the late 1970s and early ‘80s, major U.S. companies ploughed close to half of their profits into expanding their businesses, funding R&D, retraining workers and paying them more, and paid out the other half of profits to shareholders.

But from 2003 to 2012, Lazonick found, shareholders got 91% of corporate profits and growth got only 9%.

That is a disastrous ratio the American economy.


Here's the Harvard Business Review that Hedrick Smith is referencing ... hbr.org

#12 | Posted by PinchALoaf at 2018-01-03 08:24 PM

... thanks, douchebag billionaires.

#13 | Posted by PinchALoaf at 2018-01-03 08:26 PM

The problem with budgeting and funding go hand in hand, regardless of whether it's a household or the Federal Government. On the first day of Econ 101, you're taught that Economics is the study of how to satisfy infinte wants with finite resources. And I don't think I've ever seen a politician put forth a budget that was feasible relative to the ability to fund it. If you cut programs as a means of reducing costs, you're going to piss off voters somehwere. Increase taxes and you piss off those who pay taxes. Right now, we're just getting deeper and deeper into debt, because people aren't willing to pay a tax rate necessary to fund the programs they want, nor are they willing to do away with programs and bring tax rates down to a level that could be funded at a level taxpayers were willing to pay. So we do the really, really American thing and just borrow from someone else. In this case, our kids.

#14 | Posted by madbomber at 2018-01-03 08:40 PM

"... thanks, douchebag billionaires."

What did they do that makes them any different from anyone else?

#15 | Posted by madbomber at 2018-01-03 08:41 PM

What did they do that makes them any different from anyone else?

#15 | POSTED BY MADBOMBER

Their greed is wrecking the country.

#16 | Posted by PinchALoaf at 2018-01-03 08:45 PM

I worked for a consultant company for 20 years. The company had been in business for over 100 years. Every year they give employees a 1.5 to 2% raise and 1-2% bonus across the board.

They billed on an hourly rate.

As a project manager I had access to billing rates that we billed our clients. They were generally increased from 7-10% per year.

So where did the excess profit go? Into the pockets of the owners. You hear through the grapevine how one owner's wife bought a boutique business in Florida and the owner flew to Florida every weekend while the other owner bought his son 2 restaurants in Philadelphia.

no profits do not trickle down, ---- when the economy slowed down they used that as an excuse to get rid of their holiday party (which cost them a lot), made employees work what otherwise were given as holidays (i.e. day after Thanksgiving, president's day) but when the economy turned around they didn't return those things.

#17 | Posted by truthhurts at 2018-01-03 08:53 PM

IOW those owners don't need a tax cut

#18 | Posted by truthhurts at 2018-01-03 08:54 PM

The problem with budgeting and funding go hand in hand, regardless of whether it's a household or the Federal Government.

I don't think that is true. Managing a household budget is trying to run things and not run out of money. Run out of money, the lights go out.

Managing a government budget means you don't have to worry about running out of money, because it is limitless. Think Newport News is going to repo an aircraft carrier?

You get way more stuff the government way.

#19 | Posted by REDIAL at 2018-01-03 09:03 PM

"But from 2003 to 2012, Lazonick found, shareholders got 91% of corporate profits and growth got only 9%.

That is a disastrous ratio the American economy."

Okay. Fair enough...but does that "seminal journalist" (not sure what that means) tie this directly to tax policy?

#20 | Posted by eberly at 2018-01-03 09:08 PM

"I worked for a consultant company for 20 years."

If they mistreated you so badly, why did you stay for so long?

#21 | Posted by eberly at 2018-01-03 09:10 PM

"I worked for a consultant company for 20 years."
If they mistreated you so badly, why did you stay for so long?
#21 | Posted by eberly

got training, licenses and lethargy (plus some other unofficial fringe benefits), finally decided to strike out on my own and never looked back

#22 | Posted by truthhurts at 2018-01-03 09:13 PM

Okay. Fair enough...but does that "seminal journalist" (not sure what that means) tie this directly to tax policy?

#20 | POSTED BY EBERLY

See the below link ...

www.drudge.com

Go to the video, and from 4:35 to 7:40, Hedrick Smith explains it.

#23 | Posted by PinchALoaf at 2018-01-03 09:28 PM

"Their greed is wrecking the country."

Not really. At least no more so than the rest of us...none of whom seem anymore interested in paying taxes than they. In fact if you really wanted to capture tax reveunes, what you'd really need to do is increase taxes on the growing class of high earning professionals. Nobody wants to do this...in fact many of them were livid when Trump threatened to removed their ability to deduct state taxes, thus forcing them to pay more in federal income tax.

"So where did the excess profit go? Into the pockets of the owners."

What would you have done with it? In all my work experience, the owners in some fashion rewarded the most valuable employees based on performance, but certainly not everyone. If your efforts didn't directly contribute, then why would you expect the company to reward you? That's part of being an employee...you get paid regardless of how bad (or good) a company does.

#24 | Posted by madbomber at 2018-01-03 09:34 PM

"Managing a government budget means you don't have to worry about running out of money, because it is limitless."

Think about what you just said...and then slap yourself...and then go back to school.

#25 | Posted by madbomber at 2018-01-03 09:34 PM

"got training, licenses and lethargy (plus some other unofficial fringe benefits), finally decided to strike out on my own and never looked back..."

And now it's YOU putting 7% in your pocket. Lesson well learned, my friend.

#26 | Posted by madbomber at 2018-01-03 09:35 PM

23

No, he doesn't. He points out top marginal rates under Eisenhower and Kennedy cut them. that's it.

He doesn't tie this directly to tax policy.

If anything, he tied it to corporate lobbying (which is about a whole lot more than about taxes).

I'm not saying he's wrong.....and I'm not saying it's not tied to tax policy. Maybe you meant to reference a different part of the interview.

#27 | Posted by eberly at 2018-01-03 09:37 PM

And for the love of Christ...no more Henry Ford references. He wasn't competing in a global labor market nor even a global market for cars.

His employees didn't have a lot of car buying choices. I appreciate his sentiment about paying his workers enough but lets' remember it's an extreme case of apples to oranges.

#28 | Posted by eberly at 2018-01-03 09:48 PM

"And for the love of Christ...no more Henry Ford references. He wasn't competing in a global labor market nor even a global market for cars. "

How does that change the fact that paying your workers enough to buy your products helps sell your products?

#29 | Posted by snoofy at 2018-01-03 09:54 PM

"There's not really any reason to pay more for a widget (or a worker) than you currently do"

So then why do the prices of widgets keep going up?
Apparently, it's for "no reason."

#30 | Posted by snoofy at 2018-01-03 09:58 PM

"How does that change the fact that paying your workers enough to buy your products helps sell your products?"

How can you sell products when it costs more to make them than people are willing to pay?

"So then why do the prices of widgets keep going up?"

They don't...is this really a discussion you want to have yet again? Were you drunk the first ten times or something?

#31 | Posted by madbomber at 2018-01-03 10:01 PM

"And it's way too early to keep score on it. Fundamentally, I disagree with the tax bill as it's a giveaway to the wealthiest that will generate more deficits."

It's certainly a possibility. The Kennedy and Reagan tax cuts both increased total receipts...whether that happens again has yet to be seen. The difference with the current tax plan is that it appears to accept an increased deficit as an acceptable side effect. Reagan had never intended for deficits to increase, and regarded the increases as a serious disappointment.

#8 | Posted by madbomber at 2018-01-03 05:02 PM | Reply | Flag:| Newsworthy 1

This is misleading, if not an outright falsehood. I didn't really research the Kennedy tax cuts, but I remember the Reagan tax cuts. The cut of 1981 was followed by a huge drop in revenue, forcing multiple tax increases to recover that revenue.

Here is some information on the effects of the Reagan-era "cuts": Fact Checker

More analysis here. I know nothing much about this site, but the analysis seems sound.

The bottom line is the 1981 tax cut clearly resulted in a loss of revenue. The 1986 tax "cut" also included multiple provisions to offset the cuts. Much of the revenue gain during the 80's can be attributed to the increase in the FICA rate (a tax increase) in that 1986 tax "cut". The analysis also tackles the "but it increased GDP" argument. There is simply no statistical evidence of any effect on GDP growth rate from the tax cuts.

If I find the time, I can also dig up some references noting the dramatic increase in the upper 10%'s or 1%'s share of total income relative to the rest of the population, which certainly has some relation to the lowering of the top marginal tax rate. It also demonstrates that the lowering of the tax rates has not resulted in a significant increase in income to the average worker.

#32 | Posted by StatsPlease at 2018-01-03 10:11 PM

Reagan raised taxes 11 times to make up for those cuts.

"It's difficult to imagine today, but taxing the rich wasn't always a major flash point of American political life. From the end of World War II to the eve of the Reagan administration, the parties fought over social spending – Democrats pushing for more, Republicans demanding less.

But once the budget was fixed, both parties saw taxes as an otherwise uninteresting mechanism to raise the money required to pay the bills. Eisenhower, Nixon and Ford each fought for higher taxes, while the biggest tax cut was secured by John F. Kennedy, whose across-the-board tax reductions were actually opposed by the majority of Republicans in the House.

The distribution of the tax burden wasn't really up for debate: Even after the Kennedy cuts, the top tax rate stood at 70 percent – double its current level.

Steeply progressive taxation paid for the postwar investments in infrastructure, science and education that enabled the average American family to get ahead."

"There was only one problem: The Reagan tax cuts spiked the federal deficit to a dangerous level, even as the country remained mired in a deep recession.

Republican leaders in Congress immediately moved to reverse themselves and feed the beast. "It was not a Democrat who led the effort in 1982 to undo about a third of the Reagan tax cuts," recalls Robert Greenstein, president of the nonpartisan Center on Budget and Policy Priorities. "It was Bob Dole."

Even Reagan embraced the tax hike, Stockman says, "because he believed that, at some point, you have to pay the bills.""

"For the remainder of his time in office, Reagan repeatedly raised taxes to bring down unwieldy deficits. In 1983, he hiked gas and payroll taxes. In 1984, he raised revenue by closing tax loopholes for businesses. The tax reform of 1986 lowered the top rate for the wealthy to just 28 percent – but that cut for high earners was paid for by closing tax loopholes that resulted in the largest corporate tax hike in history.

Reagan also raised revenues by abolishing special favors for the investor class: He boosted taxes on capital gains by 40 percent to align them with the taxes paid on wages.

Today, Reagan may be lionized as a tax abolitionist, says Alan Simpson, a former Republican senator and friend of the president, but that's not true to his record. "Reagan raised taxes 11 times in eight years!"

excerpts from the seminal historical article on How the Republicans Became the Party of the Rich

www.rollingstone.com

#33 | Posted by Corky at 2018-01-03 10:21 PM

"How does that change the fact that paying your workers enough to buy your products helps sell your products?"

not if you have fewer and fewer employees due to automation and technology and you can sell your products all over the world.

What your employees can afford to buy from you is much less relevant.

#34 | Posted by eberly at 2018-01-03 10:53 PM

--Hedrick Smith, a seminal journalist,

--excerpts from the seminal historical article on How the Republicans Became the Party of the Rich

lol

#35 | Posted by nullifidian at 2018-01-03 10:54 PM

One, two, three, four, artificially inseminate. Schlemiel! Schlimazel! Hasenpfeffer Incorporated!

--Laverne & Shirley

#36 | Posted by madscientist at 2018-01-03 11:07 PM

"not if you have fewer and fewer employees due to automation and technology and you can sell your products all over the world."

No, that doesn't change anything.

If no employer paid their workers a high enough wage to buy the things they produce, it wouldn't mater. All that would happen is some Henry Ford in some other country's workers would pick up the slack. And if there were no Henry Fords, well, the owners would just keep getting richer and richer but they'd have to buy each other's goods to keep the economy afloat, or there would be no need for so much production.

Unless you want the government to become a the major purchaser, the economy isn't sustainable unless producers can buy the things that the economy produces.

#37 | Posted by snoofy at 2018-01-03 11:14 PM

""So then why do the prices of widgets keep going up?"
They don't...is this really a discussion you want to have yet again?
#31 | POSTED BY MADBOMBER"

I see you are pricing widgets by the square foot again.

#38 | Posted by snoofy at 2018-01-03 11:15 PM

"What your employees can afford to buy from you is much less relevant."

"Your" employees, I get it, but that's not the point. Somebody's employees have to make a premium. 70% of GDP is consumer spending.

It is better for America if the bulk of those consumers were Americans with extra money to spend, when the alternative is Americans without extra money to spend.

Don't you get that? I'm sure you get it.

#39 | Posted by snoofy at 2018-01-03 11:20 PM

lol

#35 | POSTED BY NULLIFIDIAN

You're really getting good at this retorting thingy. It shows.... no, really, it does.

You can ignore the quotes from two of Reagan's Budget Dirs and various Reagan Republicans, not to mention the undeniable history quoted, and just play stupid by pretending to undermine the sources.

But it's a good tact for you, the playing stupid part. You're a natural at it.

#40 | Posted by Corky at 2018-01-03 11:21 PM

No, he doesn't. He points out top marginal rates under Eisenhower and Kennedy cut them. that's it.

He doesn't tie this directly to tax policy.

If anything, he tied it to corporate lobbying (which is about a whole lot more than about taxes).

I'm not saying he's wrong.....and I'm not saying it's not tied to tax policy. Maybe you meant to reference a different part of the interview.

#27 | POSTED BY EBERLY

Arguing over mintute details is meaningless because it's not any singular tax that explains the problem ... it's tax policy as a whole combined with financial and business policies that over time ecourages corporations to pocket profits instead of reinvesting those profits.

Stop looking for silver bullet answers to explain these things.

#41 | Posted by PinchALoaf at 2018-01-04 06:23 AM

There's not really any reason to pay more for a widget (or a worker) than you currently do...unless they will or have the potential to offer more to the firm.

#7 | Posted by madbomber at 2018-01-03 04:44 PM | Reply | Flag:

Every time tinkle down is pushed as an valid economic theory this is pointed out by the left. Good to see you embracing reality. There is hope for you yet.

I agree that it will be pushed out as stock or bonuses....to the C suite only.

But then again when Dotard pushes his $4,800 average wage increase lie we already know that 99.999% of those wage increases are going to the top and .001% to the people that actually do the work.

#42 | Posted by 726 at 2018-01-04 07:20 AM

This is misleading, if not an outright falsehood. I didn't really research the Kennedy tax cuts, but I remember the Reagan tax cuts. The cut of 1981 was followed by a huge drop in revenue, forcing multiple tax increases to recover that revenue.

"The cut of 1981 was followed by a huge drop in revenue, forcing multiple tax increases to recover that revenue."

I'm not sure what you're referencing...even the article you presented acknowledges that tax revenues increased between the years of 1980 and 1988 by 25%, despite the lower rates. I don't know if you're referencing some effect of the business cycle...I suppose at some point revenues could have been lower than they had during a previous snapshot, but writ large the increases in revenue are well documented.

The other unintended effect of the tax cuts was shifting the overall burden to the right and onto the shoulders of higher income earners, although that's a tangential issue unlreated to tax receipts.

"crab.rutgers.edu"

"If I find the time, I can also dig up some references noting the dramatic increase in the upper 10%'s or 1%'s share of total income relative to the rest of the population, which certainly has some relation to the lowering of the top marginal tax rate. It also demonstrates that the lowering of the tax rates has not resulted in a significant increase in income to the average worker."

And there is no reason why the average worker would benefit, given that his or her pay is based on their relative value within the market. Just because I have more income available due to a tax cut doesn't mean I'm going to use that money to pay more for something I'm already getting at a lower price, labor or otherwise.

#43 | Posted by madbomber at 2018-01-04 09:02 AM

"I see you are pricing widgets by the square foot again."

Name your widget and let's see if it cost more today, 1980, 1960, or some other point in time.

#44 | Posted by madbomber at 2018-01-04 09:04 AM

"It is better for America if the bulk of those consumers were Americans with extra money to spend, when the alternative is Americans without extra money to spend."

You can put your fears to rest, lil buddy. Median household income is higher now than at any point in history. Disposable also remains very, very high. Combine that with a declining cost in consumer goods, and you have a recipe for more people being able to put more ---- in their house. Their 2500 square foot house.

"Stop looking for silver bullet answers to explain these things."

Part of the problem with the arguments that the tax cuts didn't increase revenues is that they don't provide some other, regression analysis deduced correlation that would provide a different explanation. It's almost like a scientist saying that there is no correlation between lightning and thunder....without providing any possible, peer-reviewable explanation for why thunder always seems to follow lightning.

#45 | Posted by madbomber at 2018-01-04 09:19 AM

Wait, you mean corporations aren't making rash decisions off the cusp just to appease the Liberal media? How dare they!!! A Democrat can be in office for a year and his followers STILL say enough time hasn't passed to judge him on it...but a Republican, wow, less than a month and the entire world is destroyed because of him/her. Tolerance is only good to Democrats when they want it to be.

#46 | Posted by humtake at 2018-01-04 11:46 AM

"Stop looking for silver bullet answers to explain these things."

what? You need to stop inventing silver bullet answers to explain these things. That's what you do and it's why I call you on the carpet for it...over and over.

#47 | Posted by eberly at 2018-01-04 02:52 PM

First Trump went to his base and declared the tax bill terrible for himself and all the other US billionaires. The he went to Mara-Lago and declared they'd all gotten richer.

What a ------- lying -------.

#48 | Posted by bayviking at 2018-01-04 05:27 PM

what? You need to stop inventing silver bullet answers to explain these things. That's what you do and it's why I call you on the carpet for it...over and over.

#47 | POSTED BY EBERLY

Called on the carpet? Whatever you say, Oprah.

The other week you and BruceBanner couldn't agree whether U.S. productivity was rising or declining -- that's why it's foolish to get wrapped around the axle on details.

Bottom line is tax policies, business policies, and overall U.S. fiscal policies have all combined to encourage corporations to pocket more than 90% of their profits. Not hard.

#49 | Posted by PinchALoaf at 2018-01-04 06:55 PM

"The other week you and BruceBanner couldn't agree whether U.S. productivity was rising or declining"

wrong, again. It bruce and someone else...and someone posted that productivity was declining and they backed it up. That was the end of it.

you're making up stuff.

and if details bother you...then stay away from them.

#50 | Posted by eberly at 2018-01-04 06:59 PM

wrong, again. It bruce and someone else...and someone posted that productivity was declining and they backed it up. That was the end of it.

you're making up stuff.

and if details bother you...then stay away from them.

#50 | POSTED BY EBERLY

I stand corrected, it was your kissing cousin on all things involving apologizing for d-bag billionaires, RoC ... and my point still stands about you and RoC in getting bogged down with details -- it wasn't settled.

www.drudge.com

The Harvard Business Review studied all this, and one of the things the HRB pointed out was how much corporations pocketed profits (91%) as compared to re-investing their profits (9%).

The HBR also explains in detail what drives all that, so by all means go and click on the link in post # 12 and get yer ya ya's out on all those wonderful details that will also show how wrong you are -- lol.

#51 | Posted by PinchALoaf at 2018-01-04 07:44 PM

"..it was your kissing cousin"

wow, you are so injured. Have you lost your job? Suffer some other kind of loss?

#52 | Posted by eberly at 2018-01-04 08:32 PM

"Name your widget and let's see if it cost more today, 1980, 1960, or some other point in time."

Average new home cost.
Average new car cost.
Average new computer cost.
Average college education cost.
Average health insurance premium cost.

#53 | Posted by snoofy at 2018-01-04 09:56 PM

The reason for the tax breaks is to invigorate the economy, any bonuses to workers is icing on the cake.

#54 | Posted by MSgt at 2018-01-05 02:03 PM

"The reason for the tax breaks is to invigorate the economy..." - #54 | Posted by MSgt at 2018-01-05 02:03 PM

According to the economic indicators, the economy is doing great (thanks President Obama).

Why does it need invigorating?

#55 | Posted by Hans at 2018-01-05 02:09 PM

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