Republicans trust corporations more than regular people. Corporations have certainly not earned that trust, not by a long shot. Just recently we saw the latest example of large-scale corporate malfeasance, as the Volkswagen emissions cheating scandal reached a new level of s(ick)ening with the revelation that the company forced monkeys to be exposed to exhaust fumes—at least they let them watch cartoons in the meanwhile. One executive (just one?) has finally been suspended.
But do we need strong regulations, and should we properly fund their enforcement? The Republican Party and its leader, Donald Trump, have spent the last year making their answer to that question quite clear. They trust corporations. And they do so because the Republican Party and the wealthy interests who own those corporations operate as partners (in crime).
We see this partnership in the breathless announcements by companies touting the bonuses they are giving workers and the investments they are making supposedly because of Trump’s tax plan. Never mind that many of these were already scheduled (like AT&T’s bonuses and much of Apple’s investment, for a couple of examples), or that other companies, like Walmart, Home Depot, and Lowe’s announced that full-time workers would get a bonus of “up to” $1000, but only gave that amount to employees with twenty years on the job. The median bonus in those cases was more likely around $200 for full-timers, given the average tenure for workers in the retail industry. This NYT article details other examples of bonuses that “didn’t live up to their billing.” Oh, and Walmart also cut 10,000 jobs the same day it touted the bonuses.
Overall, Trump giving ‘shitholes’ of money to corporations led to some of it trickling down—in the form of one-time bonuses, rather than raises, in most cases. Please note that the benefits to the corporations, of course, are not one-time bonuses but gifts to their bottom lines that will keep on giving every year, at least until Democrats get in there and do tax reform the right way. When 241 corporations were asked if Trump’s rich man’s tax cut would lead them to increase salaries going forward, 83% said no.
What exactly is the relationship between these bonuses, not to mention the overall wage gains that Trump touted in his State of the Union address, and his rich man’s tax cut? Here’s economist Joel Slemrod of the University of Michigan, whose expertise is in studying the economic effects of tax legislation (he co-wrote the “seminal” work on the 1986 tax reform law’s impact):
Many companies have been doling out bonuses to employees since the tax legislation passed, but “I don’t think that tells us anything,” Professor Slemrod said. That’s because in standard economic theory, labor market conditions dictate employee compensation levels, not cash flow or profitability.
“The labor market was strengthening long before Mr. Trump was elected or the tax bill was passed,” Professor Slemrod said. “If companies were going to raise wages anyway to stay competitive, they have a public relations incentive to attribute it to tax cuts.”
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