Congressional Republicans and President Trump continue to push their sole legislative accomplishment, the Tax Cuts and Jobs Act of 2017, as a game-changer for average working Americans — but the benefits of that bill appear to be going mostly to the people at the top.
Rather than delivering an “economic turnaround of historic proportions,” as Trump boasted last week, the bill will likely end up costing well over $1.4 trillion dollars and will instead provide corporations and the wealthiest Americans a giant hand-out.
A recent Politico review of Securities and Exchange Commission (SEC) filings also revealed corporate executives, who often receive most of their compensation in stock, have been profiting enormously off the bill, which slashes the corporate tax rate to 21 percent.
Following the bill’s passage in December last year, Oracle Corp. CEO Safra Catz sold $250 million worth of shares in her company, the “largest executive payday this year,” according to Politico. The company’s president of Product Development, Thomas Kurian, also sold $85 million worth of shares, directly after the company announced a $12 billion share repurchase.
Oracle isn’t the only company whose top brass have benefited from the tax bill: in May, Mastercard CEO Ajay Banga sold $44.4 million of stock. Only a few months earlier, the company had announced it would buy back $4 billion in shares. According to Reuters, Mastercard also announced that month it had “increased its quarterly cash dividend to 25 cents per share, a 14 percent increase over the previous dividend of 22 cents a share.”
Similarly, after Eastman Chemical announced in February it would purchase $2 billion of its own stock, its CEO, Mark Costa, sold 55,000 shares, raking in at least $5.4 million in the process.
Data from Americans For Tax Fairness found that powerful Fortune 500 companies have spent a total of over $238,244,348,330 in stock buybacks since December. The numbers showed few corporations have actually used their respective tax windfalls to benefit workers directly, as many pledged they would do.
Out of the over 1,500 companies from which Americans for Tax Fairness collected data, only 359 of them actually promised to increase wages for their employees. Of those that promised to bump wages, the majority only offered an increase up to $15 an hour in entry-level pay — which, by all accounts, should already be what companies pay entry-level employees in a tightening labor market.
Despite what Republicans in Washington have suggested, stock buybacks do absolutely nothing to help struggling middle America. Instead, they traditionally enrich both the company buying back shares and those who own corporate stock, which typically means the already-rich. The wealthiest 10 percent of American households own 84 percent of all shares, while the top 1 percent own 40 percent. Roughly one-half of American households don’t own stock at all.
The AFL-CIO’s annual Executive PayWatch database, released in May, also revealed just how stark income inequality is among CEOs and their workers. On average, data showed, CEOs are paid 333 times more than an average employee at their company.
The disparity between CEO and worker pay is consistent with income inequality on a wider scale. While average worker wages have been stagnant for decades, the top 1 percent of U.S. income earners have “more than doubled their share of the nation’s income” since the 1970s, the Institute for Policy Studies observed.
The Trump administration continues to tout the nation’s record low unemployment rate as a sign that the country’s economy is thriving. But as former Secretary of Labor Robert Reich detailed in a recent op-ed for The Guardian, 80 percent of Americans are living paycheck-to-paycheck.
“The typical American worker now earns around $44,500 a year, not much more than what the typical worker earned in 40 years ago, adjusted for inflation,” Reich wrote. “When Republicans delivered their $1.5 trillion tax cut last December they predicted a big wage boost for American workers. Forget it. Wages actually dropped in the second quarter of this year.”
About the Author: Rebekah Entralgo is a reporter at ThinkProgress. Previously she was a news assistant on the NPR Business Desk. She has also worked for NPR member stations WFSU in Tallahassee and WLRN in Miami.
This article was originally published at ThinkProgress on July 30, 2018. Reprinted with permission.