1909 painting “The Worship of Mammon,’’ by Evelyn De Morgan.
Via OtherWords.org
We should have told them to be more specific. When President Trump and his fellow Republicans in Congress called their massive tax overhaul last year the “Tax Cuts and Jobs Act,” most of us assumed the jobs would be in the United States.
Now we know better.
Yes, unemployment in this country is low, but there’s no evidence it’s because of last year’s GOP tax cuts. More likely it’s simply a continuation of an eight-year trend of steady job growth that began under President Obama.
On the other hand, we can reasonably connect specific losses in U.S. employment to the Trump-GOP tax law. For instance, last summer General Motors decided to build its Chevrolet Blazer in Mexico rather than the United States.
Then this November, it announced plans to close five North American assembly plants and lay off nearly 15,000 workers in such states as Ohio, Michigan and Maryland.
The Republican tax law encourages that kind outsourcing because it charges corporations just half the tax rate on foreign profits that it charges on domestic earnings. It’s hard to imagine a stronger lure for corporations to pack up their plant and equipment and ship them offshore.
But you don’t have to imagine, because it’s right there in another part of the law: The more U.S. corporations shift factories and other sources of production overseas, the lower the U.S. taxes are on their foreign profits.
It’s almost as if the GOP law was designed to promote outsourcing.
It certainly isn’t doing much for American workers, despite all the hype and promises from President Trump and other Republicans. Trump claimed his giant corporate tax cut would result in employers giving every working family a $4,000 raise.
Workers are still waiting.
Almost a year after the law was enacted, only 4 percent of them have gotten a raise or even a one-time bonus tied to the tax cuts. Where the tax-cut money is really going — as many of us predicted — is into the bank accounts of CEOs and other senior executives and rich shareholders.
Since Trump’s tax cuts, corporations have announced 117 times more in stock buybacks ($832 billion) than they’ve spent on worker pay hikes ($7 billion). Buybacks pump up the price of shares, further enriching stockholders, including company execs, much of whose compensation is in company stock.
GM is a perfect example. It got a tax cut this year of over $150 million, with more to come in future years. That’s on top of a one-time tax cut probably worth hundreds of millions on the $6.5 billion in profits it stashed offshore.
GM used that money to buy back $100 million of its own shares. It gave nothing to its workers — unless you count pink slips.
And it will undoubtedly continue to lavish its top executives with huge pay packages, such as the $22 million in total compensation chief executive Mary Barra received last year. That’s almost 300 times more than the average GM employee makes.
All this demonstrates a simple truth: Tax cuts for the wealthy and corporations help the wealthy and corporations, not American workers. In fact, those high-end tax giveaways wind up hurting working families and their communities.
Damage doesn’t just come from outsourcing and layoffs. The Republican tax law will eventually cost $1.9 trillion. That digs a deep debt hole that GOP leaders have already admitted they plan to fill with money taken from Social Security, Medicare, Medicaid and other services that the American people rely on.
If we really want to help the laid-off GM workers and towns facing empty factories, we need to reverse the tax cuts for the rich and corporations. We also need to stop the offshoring of American jobs by passing the “No Tax Breaks for Outsourcing Act” now before Congress.
The next time Republicans claim a tax cut slanted towards the wealthy will create jobs, we’ll make sure to ask: Where?
Frank Clemente is executive director of Americans for Tax Fairness.
