Current Events > Companies say most gains from tax cuts would go to shareholders, not workers

(+) Yeah! (+)

https://www.bloomberg.com/news/articles/2017-11-29/trump-s-tax-promises-undercut-by-ceo-plans-to-reward-investors

Major companies including Cisco Systems Inc., Pfizer Inc. and Coca-Cola Co. say theyll turn over most gains from proposed corporate tax cuts to their shareholders, undercutting President Donald Trumps promise that his plan will create jobs and boost wages for the middle class.

The president has held fast to his pledge even as top executives comments have run counter to it for months. Instead of hiring more workers or raising their pay, many companies say theyll first increase dividends or buy back their own shares.

Robert Bradway, chief executive of Amgen Inc., said in an Oct. 25 earnings call that the company has been actively returning capital in the form of growing dividend and buyback and Id expect us to continue that. Executives including Coca-Cola CEO James Quincey, Pfizer Chief Financial Officer Frank DAmelio and Cisco CFO Kelly Kramer have recently made similar statements.

Well be able to get much more aggressive on the share buyback after a tax cut, Kramer said in a Nov. 16 interview.

U.S. voters disapprove of the Republican tax legislation by a two-to-one margin, according to a Quinnipiac University poll released Nov. 15, and corporate promises to return any windfall to investors arent helping the White House sales effort. The Trump administration has appeared flummoxed. At a Nov. 14 speech to the Wall Street Journal CEO Council by Trumps top economic adviser, Gary Cohn, the moderator asked business leaders in the audience for a show of hands if they planned to reinvest tax cut proceeds. Few people responded.

Why arent the other hands up? Cohn asked.

Trump has insisted that the Republican tax plan cut the U.S. corporate rate to 20 percent from 35 percent. Another provision would impose an even lower tax rate on companies stockpiled overseas earnings, giving them an incentive to return trillions of dollars in offshore cash to the U.S. That money is also unlikely to spur hiring because companies are already well-capitalized and can bring on as many employees as they need, said John Shin, a foreign-exchange strategist at Bank of America Merrill Lynch.

Companies are sitting on large amounts of cash. Theyre not really financially constrained, Shin, who conducted a survey of more than 300 companies asking their plans for a tax overhaul, said in an interview. Theyre still working for their shareholders, primarily."

White House officials say their coordination with business leaders has been effective, highlighting remarks by executives at companies including Broadcom Ltd. and AT&T Inc. that have explicitly linked tax cuts to job growth.

The administration has been working with business leaders and job creators from the beginning of the tax reform process, White House spokeswoman Lindsay Walters said in a statement. We are encouraged by the strong support we continue to receive as we create a pro-growth, pro-worker and pro-American business tax system that will lead to more jobs, higher wages and a renewed competitive advantage for American companies.

hmmm
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Trickle down creates jobs guys.
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i mean duh

the point of these cuts is to buoy an overheated stock market

consider:

http://www.multpl.com/shiller-pe/

if the tax cut fails it all goes to hell
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Obviously, this tax bill is just to get their masters and donors off their backs and nothing is going to stop it because even the moderate republicans are scared of losing their donations because without those they'll get destroyed in 2018 by trump supporters coming out against them to vote in people who love Trump like a cult loves it's leader.
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Duh
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Derp. Working as intended.
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That is what had historically happened when corporate rates are cut. We do need to lower our corporate taxes, but those cuts need to be balanced by tax hikes on things like cap gains and dividends
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Nobody believes this job creation bullshit except for republican voters who are convinced giving more money to corporations and rich people will benefit them.
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KiwiTerraRizing posted...

Nobody believes this job creation bullshit except for republican voters who are convinced giving more money to corporations and rich people will benefit them.

It's like tithing to the Free Market Jesus.
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This topic is more important than Trumps racist shit-tweeting. Both are pretty bad though.
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Balrog0 posted...

That is what had historically happened when corporate rates are cut. We do need to lower our corporate taxes, but those cuts need to be balanced by tax hikes on things like cap gains and dividends

tbh i worry that these cuts are allowing stock markets to inflate to insane P/E ratios that make no sense to buy

if the tax cut bill fails for some reason you can expect the stock market to go into freefall

it's entirely dependent on the expected tax cuts which are already priced in

that is not a good way to let the market run.
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The saddest thing in all of this is that there are people who actually think this is a good move despite being poor as shit. The rich just keep making more money without any of that positively affecting the ever shrinking middle america and especially not the poor.
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Balrog0 posted...

but those cuts need to be balanced by tax hikes on things like cap gains and dividends

Kinda?
Those things need to be treated like any other income, and not given a preferred tax rate.

Questionmarktarius posted...

Kinda?
Those things need to be treated like any other income, and not given a preferred tax rate.

i.e., a tax hike on them
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Balrog0 posted...

Questionmarktarius posted...

Kinda?
Those things need to be treated like any other income, and not given a preferred tax rate.

i.e., a tax hike on them

I guess.

GOP: "But then you will discourage risk!"

As if 50% return on IWM in the last year wasn't enough reason
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