WASHINGTON ― Republicans insist their tax cut bill will benefit workers, though the legislation has few provisions that directly benefit people with modest incomes in the long run.
Instead, the core of the bill is a huge cut to corporate taxes, bringing the top rate down from 35 to 20 percent. Republicans say workers will be better off if corporate executives and shareholders have more money.
“If they’re making money, they invest that money, they create more opportunities, more jobs, more research,” Sen. Richard Shelby (R-Ala.) told HuffPost.
A number of top CEOs, however, have signaled they plan to reward their investors instead.
Instead of hiring more workers or increasing wages, executives from major companies including Cisco Systems, Pfizer, Coca-Cola, Amgen and Honeywell have said they plan to use the windfall from the corporate tax cut to first increase stock dividends or to buy back shares.
“We’ll be able to get much more aggressive on the share buyback” after the tax cut is passed into law, Cisco CFO Kelly Kramer said in an earnings call earlier this month. Stock buybacks increase the value of shares held by investors ― a group that typically includes corporate executives, who are among the corporate tax cut’s biggest proponents.
The intentions of corporate executives have appeared to baffle White House officials. When Gary Cohn, Trump’s chief economic adviser, asked a gathering of CEOs earlier this month to raise their hands if they planned to boost investment if rates were cut, he got a lukewarm response.
“Why aren’t the other hands up?” Cohn asked awkwardly after only a few of the business leaders raised their arms into the air.
But Republican senators on Wednesday maintained their firm belief that corporations would ultimately reinvest their gains into their workers. None expressed concerns about CEOs using tax cut gains to simply reward their investors.
“This is America,” Sen. Jim Risch (R-Idaho) told HuffPost. “The money belongs to people who have it in their pockets and they should do with it what they think is appropriate. It can help, however, to foster higher wages, because if [corporations] got more money then particularly in the climate we’re in with the shortage of employees, wages are definitely going to go up.”
Cutting the corporate tax rate is “something that will drive investment,” argued Sen. Bob Corker (R-Tenn.), a wealthy former real estate developer. “I believe that with all my heart. I was…