Home / News / Robert Reich: Trump’s Tax Cuts Benefit One Group and One Group Only

Robert Reich: Trump’s Tax Cuts Benefit One Group and One Group Only


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The justification is in: The biggest beneficiaries of the Trump-Republican taxation devise are shareholders.

Wednesday, Bank of America CEO Brian Moynihan said that “most of the benefits” from the taxation cuts “will upsurge to the bottom-line by dividends and share buybacks over time.”

Exactly. Dividends and share buybacks boost share prices. And that’s all corporate America wants to do.

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Moynihan noted that in 2017, Bank of America had $16.6 billion of net income accessible to shareholders and returned $16.8 billion by dividends and buyback. “So, yes, we will design to return some-more collateral to shareholders given the taxation [cut].”

Even the expectancy of a big corporate taxation cut has caused shares to soar. 

Because the richest 1 percent of Americans own 40 percent of all shares of stock, and the richest fifth owns 80 percent, this is good news for the wealthy.

It’s not good news for anyone else.

But wait. Didn’t Apple just announce it would “contribute” $350 billion to the U.S. economy over the next 5 years? Apple’s matter stirred Trump to gloat: “Great to see Apple follow by as a outcome of TAX CUTS. Huge win for American workers and the USA!”

Rubbish. Analysts at RBC Capital Markets believe Apple will bring back to the U.S. $207 billion after taxes and “almost all of it” will be used to prerogative shareholders by share buybacks or dividends.

Apple also announced that all employees will get $2,500 of limited stock. Good for Apple employees, but another acknowledgment that the biggest beneficiaries of the taxation cut will be shareholders.

The new taxation law is a good understanding for Apple and its shareholders. Apple has been sitting on a outrageous “overseas” income store of some $252 billion, as Apple’s accountants have reserved its gain to other countries with reduce taxation rates than the United States.

Now, though, Apple’s accountants can reallocate the income to the United States theme to a one-time taxation of 15.5 percent – reduce even than the new corporate taxation of 21 percent.

In addition, the new law allows U.S. companies to compensate only a 10.5 percent taxation on “foreign profits” – mouth-watering Apple’s accountants to continue to find ways to send its future increase abroad, and serve boosting Apple’s shares.  

Bottom line: Apple pays reduction in taxes so it can send out some-more dividends and buy back some-more shares of stock. 

Make no mistake: Trump and the Republicans are operative on interest of America’s biggest and richest investors, not American workers. 

This shouldn’t be surprising. After all, the big investors are the ones who invested in getting Trump and the Republicans into office.

Robert B. Reich has served in 3 inhabitant administrations, many recently as secretary of labor under President Bill Clinton. His latest book is “Saving Capitalism: For the Many, Not the Few.” His website is www.robertreich.org.

 



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