Corporate tax rate cut used to buyback stock and layoff workers.

Huh? Are you referring to Clinton's surpluses?

You are calling W's 3.29 T deficit paltry?

Weird neo-con economics, I guess

 

From your writings, if you really are a business owner, then you must be running one of those companies that has a manager and bunch of minimum wage workers.

Not all employees are workers. And, in the real corporate world, CEO's are employees. The companies that I have worked for tended to have the organization of a few, maybe 10% of employees, who directed the company. And the rest, the other 90%, were mostly workers who did what they were told to do. This is somewhat a reflection of society.

It is rare for a CEO to be the type that is directing everyone else what to do. In fact, most decisions tend to get decided in conference. CEO's don't always get their way and can get fired if they rub the wrong people the wrong way, or worse, embarrass the company.

There have been times that I have joked that I was a professional meeting attendee. If one follows projects and products from inception to their eventual release and continued production, from the standpoint of meetings, it is clear that most products are a result of a lot of input from a lot of different people. There is a lot of back and forth with the end result tending to be the best possible solution.

A typical product comes together as such:

It begins either when R&D stumbles onto something or Marketing keeps hearing something from customers and potential customers. It comes up in regular meetings and if it seems plausible enough, other departments will look into it. At each weekly meeting more and more will come out, specifications will start to be worked up, long range Manufacturing will begin to be planned for, Marketing will start plotting a campaign, and the like. Typically a design will be agreed on, usually by group consensus. Of course certain people have stronger personalities and ideas, but the overall design has to be agreed to. Once it comes all together in the end, it is a wide matrix of people with a wide range of functions that make it happen.

Anyhow, back to my original point that I was trying to make. Even as an employee, I have always worked for companies where it was quite easy for me to discover the inner workings of that company. That there is some magic that executives do that the average man can't comprehend is a rather absurd thing to claim.

 

There are less than half of the number of publicly traded companies on the U.S.Stock Market today than there were when Clinton was president.And despite their lofty stock prices many are barely if at all profitable.Some are barely able to cover their loan costs yet people are buying their stocks???

 

Then what you think is "discovering the inner workings" is a lot like discovering where the water goes when the toilet flushes. If you think that management is nothing more than giving orders, why aren't you a great manager? Because you have no idea what is really involved. Learning to manage is never achieved by watching someone else do it and imitating them- because the part you can't see is far more important than what is visible. It's mental; it's vision into the future, it's knowing how to put your company in the right position at the right time. A great manager is mentally wired much differently than the average person. Fact is that 50% of new businesses fail within five years, about 90% in ten. Of course, all of those people who started new businesses thought they knew how to do it.

The very best management is one person's vision. The minute it become a committee process, it develops weaknesses. This is not to say that all single management is excellent, but for those who are- there is a good chance things will go downhill if they start compromising decisions to please others. Of course, most large companies do indeed have boards of directors, and rarely does one individual hold so large a percentage of the stock that they can dictate. I know of one that does, and this guy has the golden touch- everything he tackles makes big money. I'd invest in a new company of his even before knowing what it was about, because I'd be investing in that personal ability.

My company is small- because I found out from experience that I didn't like dealing with the issues of having many employees, so I have as few as possible. It's the seventh company I've started, and it's is now about 15 years old. I have a new hire in training- at $22 per hour. Not because I'm careless with money, but because he is, or will be, worth it. While the company is very small, we do have customers in more than 110 nations. Kind of a cottage industry that does well. I would never again start a company that would have more employees than I could personally oversee- and that is a limitation in my own capacity, so I simply worked around it. That is what management must do- come with solutions that work regardless of the situations and limitations. Can't remember how many times I've had people tell me something was impossible when if fact we had already done it. Always got a kick out of that. I have about 50 successful inventions on the market, most are unique and without competition.

What the average man could be capable of and what they are willing to do are usually vastly separated by self-imposed limits of thinking. Some people just can't get outside that box, but a few can't stand being in it. I've spent a lot of time trying to teach people how to train and tune their thinking, to enable them to maximize their abilities- especially the ones they have no idea that they have. Near impossible job- most people, like you, want to measure what you don't understand with the ruler you have accepted all your life, and it just doesn't work outside your limitations. Absurd? I see the potential- and the person standing firmly in the way of finding it. That is absurd to me. It's not what you think that keeps you where you are- it's HOW you think. The how controls and limits the what, and people in that position are absolutely convinced they have explored all the options. That is correct in a way- they limit themselves. I don't expect to open any doors for you along those lines, only you can do that.

 

No, is was the Newt Gingrich/GOP surplus.

The 1994 midterm elections resulted in Republicans gaining 54 House and 9 U.S. Senate seats the biggest win of any party since the 1930's.

The Republican controlled house led by Gingrich passed the "Contract With America" which included a balanced budget requirement, tax cuts for small businesses, families and seniors, term limits for legislators, social security reform, tort reform, and welfare reform.

Bill Clinton had no choice but to go along with the "Contract With America" and signed nearly all the new budget requirements.

 

Isn't that the crazy thing about stocks, their value does not have to reflect their economic performance? Isn't that what the dot com bubble was all about. People buying stocks expecting stock prices to rise. But it was the act of buying that caused the prices to rise. Once people stopped buying the prices dropped.

 

No Gingrich and Kasich who forced Clinton to sign their budgets and tax cuts and welfare reform. Clinton increased tax rates and slowed down a very strong recovery and strong increase in tax revenues. Clinton requested more spending each year than Congress authorized, even the Democrat ones.

No, the Bush43/Republican FY2007 $161B, doesn't get much platrier than that.

What's weird about it.

 

It reflects the worth of the company and prospective growth of that worth or the potential income that stock might pay. And sometimes someone buy some stock and the price goes down.

 

Well there was a HUGE increase of small start up dot.com companies and a HUGE peak and then the dot.com bust.



And

Why don’t companies want to go public anymore?

JPMorgan pins it down to three things: “First, according to a study at the University of Florida, the cost of going public is high, with underwriting and registration costs estimated at around 14% of the funds raised.” Essentially, investment bankers are taking more and more of the money that companies raise in an IPO, reducing the attractiveness of this option for raising money. JP Morgan notes that financial institutions that are involved in running IPOs have had to deal with an “increasing regulatory burden,” so it may not just be bankers gouging businesses. The latter would be easier to reverse, and banks would have an incentive to do so too; increasing volume by lowering fees could still produce more revenue.


Lastly, it’s simply cheaper and easier to raise huge amounts of money without going public nowadays. After all, interest rates have been at all-time lows over the past six years. It isn’t necessarily that these companies are borrowing more instead of going public either; instead, JPMorgan notes that “this has resulted in more companies opting to sell themselves.” Bigger companies are able to borrow money easily and buy these smaller ones essentially. The former gets lows interest rates, while the latter makes money for its investors, without having to go through the turmoil of public markets; it’s a win-win.
https://finance.yahoo.com/news/jp-startup-public-companies-fewer-000000709.html

Yet more people that ever are in the market and markets are at record highs.

So was there a point to your observation? Good? Bad?

 

Yes I company sells stock to raise money to build a plant, they build the plant using the money from those stock sales, or at least in part, the plant gets up and running, it starts making money, they are managing the remaining debt and banking dollars, they now can buy back those shares they issued with that cash. There is nothing nefarious about it and good for the company and good for the stockholders who might include you in your retirement accounts.

Then the money the people who sold their stock gets invested into other companies in which those investors see growth, another new factory, more workers.

I don't understand the "stock buy backs bad" mentality came from.

The company is making money on it's productive capitalism it invested in and have no immediate expansion plans as they still have capacity at the new plant so they have cash, what do YOU think they should do with that cash and don't say "OH give it to the workers" the worker's productivity has not changed. When you make a profit you don't then turn around and increase your cost of goods sold your COGS cutting the very profit you are making.

Now does it mean they can hire better workers whose productivity is better? You betcha, and they do. Jack Welch said that every year cut your bottom ten percent of your work force based on performance and hire better people, and you pay more for better people. But they are still only worth their productivity. And they are certainly free to INVEST in the company and partake in those profits.

 

Uh.. lowest unemployment rates and highest hiring says your claims are based on nothing.

The only people in our society who oppose capitalism are the losers who cant figure out how to be responsible for themselves to make a buck.

 

You base your positions off a minuscule sampling, even if what you say is true, companies ARE hiring as the statistics show it.

 

Or...
Follow conservative values and you might just find yourself in the 1%.

 

Because when they cut taxes, they cut programs and the little guy always ends up getting screwed.

 

It isn't greed to keep what you earn.

 

While I generally agree with you, there is a point that I think you are missing. Stocks, generally are valued by demand. That is to say when more people want to buy a particular stock, its value increases. And when more people are selling, its value goes down.

 

Sure but company stock issuences and buybacks are normal business activitiy and helps insure investment dollars are reallocated to opporunties for higher growth.

 

Do you really think that company hiring practices are tied to CEOs personal compensation packages?

I thought you were a "captain of Industry"

These creeps got bonus' and their companies inflated their stock ownership with stock buybacks.

They DIDN'T do much if any expansion or hiring. Did they lay workers off? Some did...many didn't it but had nothing to do with the taxcut

 

All you have to do is some simple research WITHOUT your prejudice filter on, and you find that expansion and hiring, all over the nation.

But just to make it easier for you, here's a few reports on that that come from the Americans for Tax Reform. If this isn't enough data to make the point, let me know and I'll get you the long list. It's several times larger than what you see here, far too long to fit into the forum post limits.

Thanks to the Tax Cuts & Jobs Act enacted by congressional Republicans and President Trump, American manufacturers are hiring new employees, building new facilities, purchasing new equipment, and investing in current employees through pay raises, increased benefits, and bonuses.


ATR has compiled 107 manufacturer examples, including:


Advanced Superbrasives (Mars Hill, North Carolina) manufactures uniquely bonded diamond and CBN grinding wheels, filtration, and dressing machines:


Thanks to tax reform, Advanced Superabrasives of Mars Hill, North Carolina, is creating high-paying jobs, investing in workforce training and growing its operations. But what’s even more impressive is it has already given many of the 43 employees not just one, not just two, but three pay raises in 2018. - July 25, 2018, National Association of Manufacturers Shopfloor blog excerpts

Baker Boy (Dickinson, North Dakota) manufactures baked goods including donuts, breads, rolls, biscuits, and more:


Baker Boy, a North Dakota baked goods manufacturer, is producing a brand new donut thanks to the GOP tax cuts. They are also purchasing new equipment, expanding business operations, and hiring new employees.

Never before seen in North America, Magic Ring Donuts are jelly or creme-filled donuts that have a hole in the middle and are injected with filling in the donut ring. The donuts are manufactured with new technology that is only currently used overseas.– October 23, 2018 ATR Blog Post

Ball Corporation (Broomfield, Colorado) - Expanding operations, hiring new employees:


We have also heard from Ball Corporation Senior Vice President and CFO Scott Morrison, who told us that his company is looking to expand its presence in the United States and add 400 more workers to its payrolls. - January 9, 2018, National Association of Manufacturers Shopfloor blog excerpt


Beck Manufacturing International (Converse, Texas) manufactures concrete mixers:


Tom Beck, vice president of operations at Beck Manufacturing International in Converse, said he expects his company, which builds cement mixer bodies that mount on trucks, will see a reduction of close to 10 percent in its tax rate.


The savings will flow into Beck Manufacturing International investments, including an under construction manufacturing site that will double his company’s capacity in Converse, he said.


“That money that we hang on to … that’s absolutely going directly toward the new facility that will employ more people,” Beck said. - February 7, 2018, San Antonio Express-News article excerpt


Bendix Commercial Vehicle Systems LLC (Elyria, Ohio) manufactures active safety technologies, energy management solutions, and air brake charging, and control systems and components under the Bendix® brand name for medium- and heavy-duty trucks, tractors, trailers, buses, and other commercial vehicles throughout North America.


Bendix Commercial Vehicle Systems LLC, an Elyria, Ohio, vehicle-parts supplier, has seen demand for its brakes and other products surge over the past year and a half as the transportation industry has picked up steam. To meet that demand and maximize capacity, the company has increased investment in machinery and has added a rotation that allows it to run full shifts seven days a week. - July 17, 2018, Wall Street Journal article excerpt


Big River Steel (Osceola, Arkansas) manufactures advanced high-strength steels including dual phase, complex phase, martensitic steel, and farrite bainite steel products. It also produces high-strength and light-weight steels that are used in the automotive industry; wide and thick steels that are used in the pipe and tube applications; and electrical steels that are used in the energy industries:


Big River Steel is investing $1.2 billion in expansion and creating an additional 500 jobs. That means more opportunity for American workers.


A spokesman for the state notes the jobs will pay on average about $75,000 annually. - June 29, 2018 Arkansas Times article excerpt


Bio-Techne (Minneapolis, Minnesota) manufactures scientific tools:


Many of you, particularly in the U.S., have probably been keeping up with the news the past few months on U.S. tax reform. With the passage of the bill in Congress yesterday and the President’s signature, the new tax law is now official. How does this affect our company? A lot. Our current corporate income tax levels average between 29% and 31%. With this new tax law, over the next year our tax rates will drop to levels potentially as low as 21%. We don’t know the total answer yet because the law is complicated, and includes tax calculations from other countries where we do business as well. What I can tell you is that we are likely to pay substantially less taxes in the U.S. and overall.


There has been extensive media coverage here in the U.S. on what companies will do with these gains. The U.S. Government’s primary goal for the new law is that companies will use the additional monies to invest in growth, and not simply to benefit shareholders through a dividend increase or share buyback. I am happy to tell you that we will use the savings to invest in our company and in you. We will use the funds to continue our investment in the company through expansion and acquisitions. But we also want to invest in our employees. Our board of directors has approved a recommendation to pay a bonus of US $500 to every employee globally. The bonus will be paid to all employees employed as of December 31, 2017 (other than the Corporate Leadership Team) and will be included in a January 2018 payroll. Management and the Board value each of you and your contributions, and this bonus is one way we wish to show our appreciation for your contributions to our strong business performance and excellent execution.


I look forward to working with all of you to create great future of continued growth for Bio-Techne. On behalf of the entire management team, thank you. – Dec. 21, 2017 special message to employees from Bio-Techne CEO Chuck Kummeth


Brown-Forman Corporation (Louisville, Kentucky) manufactures alcohol, including Jack Daniel's, Early Times, Old Forester, Woodford Reserve, Canadian Mist, GlenDronach, BenRiach, Glenglassaugh, Finlandia, Herradura, Korbel, and Chambord:


Paul Varga, Chief Executive Officer of Brown-Forman, said, "These capital deployment actions underscore the strength of the company’s balance sheet and health of our business, and are augmented by the anticipated benefits due to tax reform.


--


The company has also decided to fully fund its current pension liability of $120 million, further strengthening an important employee retirement benefit. Additionally, with the goal of helping to fund the company’s ongoing philanthropic endeavors in the communities where Brown-Forman employees live and work, the company is pursuing the creation of a foundation with a contribution of $60-$70 million. The company anticipates that the foundation’s proceeds will provide a consistent amount of revenue per year for its charitable giving program independent of the company’s yearly earnings.– Jan. 23, 2018 Brown-Forman Corporation press release excerpts


Cardinal Manufacturing Company, Inc. (Indianapolis, Indiana) manufactures custom high quality interior signs and sign plans:


Cardinal is the leading manufacturer of Interior Signage in the Midwest. We are pleased and proud to announce our small business is rewarding our (17) Team Members at this time in 2018: Profit sharing Bonuses for those enrolled in the plan, bonuses for those new employees that are not yet eligible to enroll, and an average pay increase of over $1.00 per hour, across the board, to our fantastic Team. Cardinal will also use the additional funds available from the new tax cuts to invest in our Company’s growth and development. - August 13, 2018, Laura Mulligan, President of Cardinal Manufacturing Company Inc.


Carpenter Technology (Reading, Pennsylvania) manufactures high-performance specialty alloy-based materials and process solutions for critical applications in the aerospace, defense, transportation, energy, industrial, medical, and consumer electronics markets:


The company announced Monday that it will invest $100 million in soft magnetics capabilities and a new, precision strip hot rolling mill in Reading. The new mill, officials said, will allow Carpenter to meet the increasing demand for aerospace, consumer electronics, and electric vehicle manufacturing customers.


"With more than 90 percent of our products manufactured in the U.S., this type of capital investment will strengthen our foundation for long-term sustainable growth, provide good-paying jobs and increase value for shareholders for years to come," said Tony Thene, Carpenter Technology's president and CEO. "Today's announcement demonstrates the benefits of an effective partnership between public policy and U.S business."


Carpenter said it estimates the company will save as much as $100 million in taxes over the next five years as a result of the recently enacted Tax Cuts and Jobs Act. The company said those savings will allow it to increase investment in its manufacturing operations over the same time period. – March 26, 2018 WFMZ News article excerpt


Centennial Bolt (Denver, Colorado) manufactures bolts, nuts, screws, rivets, washers:


Mark Cordova, President of Centennial Bolt and a longtime champion of American manufacturing is part of the National Association of Manufacturers’ Executive Committee, is hailing the recently signed legislation...


“I’m mapping out putting in a new plant in the Midwest,” Cordova said. The new product line he plans to launce from that facility “is something right now that’s being manufactured primarily in China. We’re actually going to be at a competitive level to build it in the United States again.”


Other advances Cordova attributed to tax reform include:


“Tax savings aren’t just for me,” said Cordova. “It’s so people can have a better life. It’s always been a family motto: our goal is that people will do better for themselves so they can improve their lives and take care of their own.” Centennial Bolt’s new equipment will not just allow the firm to increase production and make work easier for employees—but Cordova said it’ll give the men and women on his shop floor a new reason to be hopeful, rather than watch more and more of their manufacturing jobs go overseas.- April 24, 2018 National Association of Manufacturers Shopfloor Blog article excerpt


Circuit Interruption Technology Inc. -- CIT Relay & Switch (Rogers, Minnesota) manufacturers a broad array of automotive, telecom, security, industrial, and audio thru-hole and surface mount switches and relays:


Circuit Interruption Technology Inc. dba CIT Relay & Switch manufactures and distributes electromechanical relays and switches to the electronics, security, HVAC, appliance and automotive industries. Employees were notified just before Christmas of one extra week pay added to their final year end check as a result of the new tax reform measure. Due to the positive atmosphere created by the passage of the tax bill Company profit sharing combined with normal 401K contributions amounted to an additional 5% per employee for 2017. CIT has added 10% to our staff thus far in January 2018 and more additions are expected. – Rick Hampton, CIT Relay & Switch

 

Growth in the stock price is not actual growth. It's just paper growth.

Actual growth requires innovation and increase in productivity. How are stock buybacks achieving innovation and increase in productivity? Wouldn't a company actually invest in innovation and large capital goods if they actually were growing instead of just paper growth?

Of course, getting tax cut windfalls and inflating the share price by buybacks is a lot easier than actual innovating. That's why the companies prefer these mechanisms. In the long run, however, they are destructive.

 

While I agree that innovation and productivity are the industrial drivers, stock investment is the money driver that finances much of our industry, and it is a way for everyone- including wage earning average people- to participate in corporate operations. My stocks are worth several times more than my homes, and I started investing with less than $10,000 dollars. I know a school janitor who retired with a net worth over $! million thanks to his regular and prudent stock investing. While that money is on paper- it is as real as your bank balance, and in some ways more useful.

Personally, I would love to see taxes set on a permanent percentage basis instead of never ending changes, and adopt a pay-as-you-go budget. That would give business known grounds and stabiliize many things. It would also require government to live within it's income instead of going off wildly one something popular but not critical, and at the same time ignoring something critical but not popular. Better financial management at the government level would help everyone, just as it does when applied to the family and personal levels.

 

I explained it in my post try reading it.

 

You explained in your post how stock buyback increase paper profits for the ones holding the stock, you didn't explain how they help actual growth. There is a difference between paper profits and growth.

 

I agree that the constant back and forth between lower and higher taxes isn't good for the economy. Companies hate nothing more than uncertainty. They hate getting a lower tax rate for 4 years when the GOP is in power, only to be raised again when the next Dem is in office. That makes for a very unstable business environment. The more prudent thing would have been for the GOP to not lower the tax rate at all, eliminating the need for the next Dem to raise taxes again.

However, I see the need for the politicians to appear like they are doing something when they get into office. "A new broom sweeps clean" is the motto. You not only see this in politics, but also in companies, when a new executive has to change things around for the whole purpose of change, not because the change is actually good or needed.

 

I explained how the profits made are used to buyback the stock that was issued and what happens to that capital which is shifted to other investments.

You could do your own research but here

"
The economic impact of buybacks depends on the final use of the money, whether the investor reinvests their gains in the market or puts their earnings in a personal savings account. Investors who sell their shares can use the return, or net gain, to invest in other areas of the economy, allowing capital to flow through various markets to reach optimal investment opportunities.

Additionally, stock price increases are a byproduct of removing shares from circulation. The immediate result from decreasing the amount of shares available for re-sell will only increase the earnings per share (EPS). Nike’s board recently approved $15 million worth of stock buybacks. Market value is hovering around $77. If Nike initiated their repurchase plan today, investors who sell their shares purchased at a lower price, perhaps the 52-week low of $50.35, will turn a profit. Investors wishing to sell back to the company receive the cash while the remaining shareholders benefit from the higher EPS.

The stock market is far more accessible to average investors than most Americans think. Seventy-five percent of corporate investment is held by individual households, pension funds, mutual funds, and 401(k) funds rather than by taxable entities (i.e. “rich people”). This market share increases when accounting for union households, whose nest eggs become more valuable and secure after such massive buybacks. The market is still the easiest way for the average investor to share in corporate earnings and capitalize on innovation, with 48 percent of American households owning some form of stock."
https://thehill.com/opinion/finance/399070-stock-buybacks-are-good-for-the-economy-and-your-nest-egg