Fortune 100 Companies: MASSIVE Trump/Republican Trickle Down Economics Succeeding Already

[Elephant Tipper 430]

Trickle down economics doesn't work ?  Just for you homer, just for you.  This is the opening salvo of economic success within 24 hours of passing Tax Cuts and Jobs Act.  In just a few weeks, ALL employees around the nation will have retained more income in their paychecks.

https://www.wsj.com/articles/thankful-for-massive-tax-cut-at-t-wells-fargo-promise-to-share-the-wealth-1513816012

Thankful for Massive Tax Cut, AT&T, Wells Fargo Promise to Share the Wealth

President Donald Trump has yet to sign the tax overhaul that promises to slash corporate taxes, but several big U.S. companies raced to tout plans to dole out some of the expected windfall

AT&T said it would pay a $1,000 bonus to most of its U.S. workers. Photo: stephanie keith/Reuters

By

Theo Francis

Dec. 20, 2017 7:26 p.m. ET

30 COMMENTS

 

President Donald Trump hasn’t yet signed the tax overhaul that promises to slash corporate taxes, but several big U.S. companies raced Wednesday to tout plans to dole out some of the expected windfall.

AT&T Inc. and Comcast Corp. said they would pay a $1,000 bonus to most of their U.S. workers—more than 300,000 people combined—once the president signs the legislation. Wells Fargo & Co. and Fifth Third Bancorp FITB -0.36% said they would raise their minimum wage to $15 an hour.

The moves came within hours of a final vote in the House to adopt the legislation, which would reduce the corporate tax rate to 21% from 35% and make other sweeping changes expected to cost $1.5 trillion over the next decade. The Senate passed the bill a day earlier, and Mr. Trump is expected to sign it, though perhaps not until early January.

Telecoms and banks are among those expected to get a huge boost from the overhaul since most of their operations are domestic and they pay higher effective rates than internet or pharmaceutical firms that have intellectual property or operations outside the country.

In a statement, AT&T CEO Randall Stephenson was effusive in his praise for the bill, saying Congress and Mr. Trump “took a monumental step” to align U.S. taxes with those of other industrialized countries.

A few weeks ago, Mr. Stephenson was sparring with the Trump administration after the Justice Department filed an antitrust lawsuit to block AT&T’s takeover of Time Warner Inc. He broached the question of whether the White House meddled in the process and said he didn’t know the answer. The Justice Department said there was no political interference.

Mr. Trump, in celebrating the bill’s passage in Congress in a White House event, highlighted AT&T’s pledge to give bonuses and increase spending. “That’s because of what we did, so that’s pretty good,” he said.

The mutual admiration comes after a year in which the relationship between the White House and U.S. business leaders has often proved tumultuous. Two CEO advisory panels disbanded earlier this year after members began announcing they would leave the bodies in protest of Mr. Trump’s response to a white supremacist march that turned deadly in Charlottesville, Va.

But American companies stand to benefit from the Republican tax overhaul as well as extensive efforts to cut back regulations across industries—initiatives that executives have sought to support even as they sometimes kept their distance from the president in public.

In announcing its bonus, Comcast cited both the tax cut and the Federal Communications Commission’s recent decision to roll back net neutrality regulations.

Economists and some policy makers have questioned the degree to which companies will use the savings from the tax bill to invest in the U.S. or create jobs, as opposed to buying back shares or paying dividends to shareholders.

Congressional Democrats are highlighting the risk that companies don’t ramp up hiring and investment. Sen. Chuck Schumer (D., N.Y.) circulated a list of more than 30 large public companies that have announced a combined $83.7 billion in share buybacks since the Senate passed its version of the tax overhaul in early December.

“There is a reason so few executives have said the tax bill will lead to more jobs, investments and higher wages,” Mr. Schumer’s communications director, Matt House, wrote in an email to reporters. “It will actually lead to share buybacks, corporate bonuses and dividends.”

Companies discussing their buybacks in conference calls during this period didn’t tie the announcements to the tax bill. Some, including Honeywell International Inc., explicitly said they hadn’t determined how they would use foreign assets once they had paid a one-time tax. Through Sept. 30, share buybacks have generally been declining among S&P 500 companies since about mid-2016.

On Wednesday, AT&T said it would pay its special bonus to more than 200,000 union and nonunion employees and front-line managers.

The Communications Workers of America union recognized the payouts, though it has also attacked the GOP bill as skewed toward corporate interests and the wealthy. Labor groups have asked corporations, including AT&T, to give employees a $4,000 wage increase once the tax cuts pass, citing an amount the Trump administration has said would flow to workers.

“While I’m never going to turn down money for our members, $1,000 is a drop in the bucket,” compared with companies’ benefit from the tax plan, CWA President Chris Shelton said in an interview. “We won’t rest until we get at least what they promised.”

CWA has backed the AT&T takeover of Time Warner and recently reached a tentative labor agreement boosting pay and job protections for about 21,000 of its wireless workers. Those employees would get an extra $1,000 ratification bonus if they approve the new contract.

Boeing Co., another firm expecting a big reduction in its tax bill, said Wednesday it will inject $300 million of its savings into employee-related activities, split equally between training, facilities upgrades and supporting charitable gift-match programs.

Wells Fargo plans to increase its minimum hourly wage to $15 from $13.50, a move that will affect 36,000 workers. In addition to raising its minimum wage for 3,000 workers, Fifth Third said it would give more than 13,500 of its 18,000 employees a one-time $1,000 bonus.

Fifth Third finance chief Tayfun Tuzun said in early December that he expected the bank’s effective tax rate would fall from about 26% or 27% to 12.5% or 13.5%. He also estimated that the bank would have a net gain of $240 million to $265 million. At the time, he expected the majority of the bank’s tax benefit to go to the bottom line. The bank said on Wednesday the pay raises would cost $23.6 million.

—Drew FitzGerald, Rachel Louise Ensign and Christina Rexrode contributed to this article.

[AUcivE09 582]

Its good to see a couple of large companies doing their part and helping to set a tone. My company has just announced our largest across the board raises in our 23 year history. Granted it is not a "major corporation", but our savings on taxes are trickling down to all employees minus our company owners. It has been a pretty good day so far!  Merry Christmas to all!  

[HVAU 673]

I'll take a small nibble of crow with my Christmas dinner, and if the trend continues I'll have a bit with my collared greens and black-eyed peas on New Year's.  Hopefully, because I'd rather myself and others be happy than right, by next year I can finish the whole bird.  

For now I'm still skeptical of Laffer and the Voodoo cult.

[Brad_ATX 13,654]

Agreed that it's good to see a few companies doing this, but there's a couple of things to consider.

1) When surveyed, only about 30-40% of CEOs said they expected to reinvest in their workforce.  So these may be exceptions rather than the rule.

2) The bonuses are less impressive than the actual wage hikes shown, which will have a longer lasting effect.  I'd also argue that the bonuses could have been given without the tax cuts, as the cuts haven't taken place yet.  This means the company was already sitting on this cash.

3) Let's not act like the average citizen is going to see a ton in their paycheck.  The person making $40-$50K per year is only going to get about an extra $40 per check every two weeks.  That's not life changing.  It only truly makes a difference if more companies start raising their wages along with the tax cuts.

4) Historically, trickle down hasn't worked and it's been proven on several occasions.  Instead of gloating about the one day or even one year aspect of this, let's look at it in 3-4 years once the cuts really have an effect.

[homersapien 11,337]

2 hours ago, Elephant Tipper said:

.......Fifth Third finance chief Tayfun Tuzun said in early December that he expected the bank’s effective tax rate would fall from about 26% or 27% to 12.5% or 13.5%. He also estimated that the bank would have a net gain of $240 million to $265 million. At the time, he expected the majority of the bank’s tax benefit to go to the bottom line. The bank said on Wednesday the pay raises would cost $23.6 million.

 

OK, let's see if I've got this right:.

The government borrows a dollar and gives it to corporations who are already doing well.  Some of these corporations - purely on their discretion - take about 10 cents of the windfall and give it to their employees in the form of raises.  So, if the objective was to improve the lot of the middle class, it's working - in this particular case - albeit at a miserable efficiency level of about 10%.     

Of course, it will be those same employees who ultimately have to pay the debt back, with interest.

Sounds about right. 

"Trickle down" works,  at least for the tricklers if not the tricklees.

[wdefromtx 3,159]

While I am glad the bank workers are being upped to $15/hr, I am curious if they gave equal raises to some of the employees that were at that wage already and possibly in more responsible positions, say lead teller. 

Lot of the big corporation banks treat their frontline employees like crap and will most likely cut hours to less than 40. Also, lot of the big banks are slowly eliminating tellers anyways. 

 

 

[TexasTiger 12,781]

No, it demonstrably does not work. It started with Reagan in 1981. Check out the income disparity trajectory from that point forward. This is short-term PR. We are borrowing a trillion dollars at what will be increasing interest rates to give millionaires a huge tax cut to pay them off for campaign donations. This should be obvious to any thinking person.

[homersapien 11,337]

Corporations Are Trying To Sell The GOP’s Narrative On Tax Cuts

Bonuses for workers are smart PR, but they don’t mean Republicans’ trickle-down fantasies are coming true.

The Republican lawmakers have sold the corporate portion of their tax cuts with the claim that it is actually about helping workers. Their argument is that the corporate tax cut will lead to so much growth that the increase in wages will actually be considerably larger than the tax cut itself. The GOP’s story is that lower corporate taxes inevitably mean more investment, which means higher wages for more workers, as well as increased imports and greater productivity.

The vast majority of economists have questioned this basic logic, because in the past, investment has not been highly responsive to after-tax rates of profit. But that didn’t stop the Republican-controlled Congress from passing the tax bill. And now, in an effort to build public support for the corporate tax cut, several major corporations have been announcing bonuses and pay raises for workers.

AT&T announced that it would give a one-time bonus of $1,000 to 200,000 workers. Its rival Comcast also promised a $1,000 bonus for 100,000 workers. Fifth Third Bancorp promised a $1,000 bonus for 13,500 employees, while raising its minimum wage to $15 an hour. Wells Fargo said it would raise its minimum wage to $15 an hour, too. Boeing announced a $300 million fund to be spent on training workers, upgrading facilities and matching workers’ charitable contributions.

While the employees getting these increases will undoubtedly be pleased, there are a few caveats that must be kept in mind.

First, many of these announcements refer to one-time bonuses, not permanent pay hikes. This is not what the GOP promised. The corporate tax cuts were made permanent on the grounds that companies needed the expectation of higher future after-tax profits in order to justify greater investment today. If the economy is following the course predicted by the Republicans, all these pay increases should be permanent, too.

The second caveat is that some of the increases may have little to do with the tax cut. They can be attributed instead to the tightening labor market, along with higher minimum wage laws. This is especially true of Wells Fargo, which is based in California. The state has already passed into law a $15 minimum wage, which is scheduled to be fully phased in by 2022.

Wells Fargo will be getting there a bit more quickly if it adopts its $15 minimumin 2018. It will also be applying that hike in parts of the country where the federal minimum wage of $7.25 an hour still sets the standard, but even in these other areas, a tightening labor market is putting upward pressure on wages. Last summer, Target announced that it would get to a minimum wage of $15 an hour by 2020. That announcement had no obvious connection to any expectation of a corporate tax cut.

Third, but perhaps most significantly, these pay hikes are not especially large relative to the size of the corporate tax cut. Take the example of AT&T: In 2016, the company reported operating income, net of interest, of $19.4 billion. It paid $6.5 billion in taxes, which means an effective tax rate of 33.5 percent.

If it had instead paid the 21 percent tax rate in the new bill, AT&T’s savings would be $2.4 billion. The promised bonus for 200,000 employees comes to $200 million, or less than one-tenth the size of the tax cut. This is very much in line with the expectations of tax bill critics, who predicted that the overwhelming majority of the money that corporations now get to keep will end up as higher profits paid out to shareholders, not as permanently higher wages for workers.

But the real question is not the immediate split between wages and payouts to shareholders. The Republican story of tax cut blessings rests on a great surge in investment. We should begin to know if that is going to happen very soon. After all, companies were obviously following the tax cut debate over the last two months and presumably began to make plans as to what they would do if the bill passed.

So if there is going to be the huge upsurge in investment predicted by tax cut supporters, it should be showing up in the data on orders for capital goods almost immediately. And it should be a very large upturn, not just the normal increase to be expected in an economy that has been strengthening for the last eight years.

Until we get those data, we have little basis to judge whether the tax cut will deliver the economic growth and pay increases the Republicans said would happen. This display of corporate beneficence to workers and communities is nice, but it has to be understood as part of a public relations campaign. It tells us nothing about whether the tax cut will ultimately deliver to workers the gains promised by its proponents.

https://www.huffingtonpost.com/entry/tax-cut-bonuses-corporate-pr-gop_us_5a3c1f2ae4b06d1621b3037a?ncid=inblnkushpmg00000009

[WDavE 332]

On 12/21/2017 at 10:12 AM, homersapien said:

OK, let's see if I've got this right:.

The government borrows a dollar and gives it to corporations who are already doing well.  Some of these corporations - purely on their discretion - take about 10 cents of the windfall and give it to their employees in the form of raises.  So, if the objective was to improve the lot of the middle class, it's working - in this particular case - albeit at a miserable efficiency level of about 10%.     

Of course, it will be those same employees who ultimately have to pay the debt back, with interest.

Sounds about right. 

"Trickle down" works,  at least for the tricklers if not the tricklees.

Or

We could now cut the freebies and or programs that don't work. The ones that we provided without any discretion to people and countries that have done nothing to better themselves. In some cases, this goes back 50 plus years.

 

Just as another reminder. Corporations themselves do not pay the taxes. They pass them on to their customers which for the most part is still us!

 

 

[HVAU 673]

Like the article indicates, until more significant data is available, which will be a while, there's no reason to think of this as anything but the age old tale of the Horse and Sparrow.

[homersapien 11,337]

1 hour ago, WDavE said:

Or

We could now cut the freebies and or programs that don't work. The ones that we provided without any discretion to people and countries that have done nothing to better themselves. In some cases, this goes back 50 plus years.

 

Just as another reminder. Corporations themselves do not pay the taxes. They pass them on to their customers which for the most part is still us!

 

 

Sorry but I don't get the connection.

And fyi, I don't think corporations should have to pay income tax period.  Corporations are not people.  Their owners and investors should pay tax on the income they receive from corporations.

 

 

[AUFAN78 3,889]

On 12/21/2017 at 9:40 AM, HVAU said:

I'll take a small nibble of crow with my Christmas dinner, and if the trend continues I'll have a bit with my collared greens and black-eyed peas on New Year's.  Hopefully, because I'd rather myself and others be happy than right, by next year I can finish the whole bird.  

For now I'm still skeptical of Laffer and the Voodoo cult.

Nothing wrong with skepticism. Right there with you, but props on your admission. 

Nice to see someone man up.

[TexasTiger 12,781]

You guys are easy marks for con men.

[AUFAN78 3,889]

19 minutes ago, TexasTiger said:

You guys are easy marks for con men.

So lets consider the alternative, a butthurt snowflake. No thanks. You nor I know the ultimate outcome. Let's not pretend. Time will tell. 

I prefer my glass half full, thank you very much.

Merry Christmas Tex. 

[TexasTiger 12,781]

51 minutes ago, AUFAN78 said:

So lets consider the alternative, a butthurt snowflake. No thanks. You nor I know the ultimate outcome. Let's not pretend. Time will tell. 

I prefer my glass half full, thank you very much.

Merry Christmas Tex. 

We know how it's worked in the past. Merry Christmas.

[TexasTiger 12,781]

https://www.google.com/amp/s/nypost.com/2017/12/22/att-boss-touts-big-employee-bonuses-amid-job-cuts/amp/