Republican Tax Cuts Have Put $1 Trillion Back in Shareholders’ Wallets

Discussion in 'Current Events' started by HumbledPi, Feb 20, 2019.

  1. HumbledPi

    HumbledPi Well-Known Member

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    Is everyone still boasting about how much more money is in their paycheck because of Trump's amazing, wonderful tax cut for the middle class (which expires in 2025 then oops, your taxes go up) or are corporate stockholders boasting? Thanks to Trump, their tax cut never expires. I seem to remember that the justification for the huge tax cut to filthy rich individuals and corporations was that it would actually put more money into the economy and these companies would expand, hire more workers, give some pay increases, etc. and yadda yadda. It was all lies, the majority of us knew it. But it takes reality, like right now, that proves that these corporations did nothing of the sort. They put it right into their shareholders pockets.

    Republican Tax Cuts Have Put $1 Trillion Back in Shareholders’ Wallets (this number has just been upgraded to 1.1 trillion)

    Shareholders are winning — but workers are losing out.
    • Corporate share buybacks have exceeded $1 trillion in 2018 with over a week until the end of the year.
    • This shatters the previous record of $781 billion set in 2015.
    • The increase in buybacks seems to indicate that companies are using the cash from tax cuts to buy back shares rather than invest in workers.
    Corporate share buybacks hit $1.1 trillion in 2018 with a week to go until Christmas, meaning that much of the benefit of the major tax breaks contained in the Tax Cuts and Jobs Act of 2017 appears to have gone to lining the pockets of shareholders. Of the $1.1 trillion in announced buybacks, about $800 billion have already been executed, leaving $300 billion worth of purchases left to be made.

    The $1.1 trillion-and-counting means that 2018 will shatter the previous record of $781 billion set in 2018. When the bill was being debated, opponents argued that the corporate tax cut would lead to companies spending their windfalls to enrich shareholders rather than on workers, as its proponents claimed they would. In January, Sarah Huckabee Sanders claimed that more than 70 percent of the tax cuts would be returned to workers.

    However, the record-shattering run of share buybacks would appear to indicate that companies have prioritized boosting their share price over raises, hiring or investment in infrastructure. Per the Bureau of Economic Analysis, spending on nonresidential fixed investment — a good gauge for new spending by businesses — did jump sharply to 11.5 percent in the first quarter, but it has fallen off sharply since. It was down to just 2.5 percent in the third quarter, which is a year-over-year decline of over 25 percent.
     
    Last edited: Feb 20, 2019
  2. Spooky

    Spooky Well-Known Member Donor

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    So were you making threads attacking Obama when he set the previous record for shareholder buybacks?

    I don't seem to recall that bothering anyone on the left.
     
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  3. Nunya D.

    Nunya D. Well-Known Member

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    Not quite seeing the issue here....in fact, it is often a good thing. When corporations buy back their shares, this decreases overhead. When overhead is decreased and profits stay the same, corporations tend to expand, hire more people, and/or increase employee wages/benefits......but it usually does not happen over night and it is rare to see a large return to the employees the same year shares are bought back.

    If the corporation does not buy back their shares, then much of the profit is lost in payments to shareholders. Shareholders do not care about a corporation expanding or hiring more people unless their shares increase, so that shareholder profit seldom goes back to improving the corporation.
     
    Last edited: Feb 20, 2019
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  4. flewism

    flewism Active Member

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    Lets see, my income from wages went up 12% in 2018 compared to 2017. Portfolio worth has gone up well over 20%. So what is the problem?
     
  5. wgabrie

    wgabrie Well-Known Member Donor

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    I love it when the rich get richer. :)
     
  6. Junkieturtle

    Junkieturtle Well-Known Member Past Donor

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    Obama didn't promote a tax plan that cut corporate taxes with a major selling point being that the money saved from those taxes would help people other than shareholders and owners. None of what's in this report comes as any real surprise. Neither does your whataboutism.
     
  7. Cubed

    Cubed Well-Known Member Past Donor

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    Personally, I honestly did not know that stock buy-backs were even a thing. I would have criticized him as well if I knew that was even a thing.
     
  8. TomFitz

    TomFitz Well-Known Member Past Donor

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    Did Obama change the tax laws to make it easier?
     
  9. TomFitz

    TomFitz Well-Known Member Past Donor

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    Yup, they have been a big thing for a long time. They teach it in business school as an accounting tactic.

    Stock buybacks increase owner's equity, by concentrating ownership and potentially improving borrowing power. But with the increasing emphasis on trader's commissions and CEO pay tied to stock price, there is enormous personal financial incentive to make decisions that enrich the CEO and trader class, whether or not it benefits the businesses or not.

    This was a huge subject during the abbreviated discussion over Trump's tax law.

    At one point, Steve Mnuchin had the poor judgement to convene a town hall of CEO's as a way of promoting the tax law.

    When he asked for a show of hands,to see of CEO's were going to hire more people or make new capital investments because of Trump's law, only three or four hands went up out of 100. The rest were going to put to commissions and bonuses in their pockets via stock buybacks.

    Which is precisely what happened.
     
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  10. Spooky

    Spooky Well-Known Member Donor

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    He must have done something to set the record before Trump did.
     
  11. Spooky

    Spooky Well-Known Member Donor

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    So you don't really care what Obama actually did for the wealthy you are just concerned with what he did or didn't say about it.

    Gotcha.
     
  12. TomFitz

    TomFitz Well-Known Member Past Donor

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    I knew that was well past your attention span.

    For the record, there were no changes to tax laws, that drove the previous record. It was a symptom of a booming economy. Trump supercharged it with tax cuts that drove an increase of nearly 50% in stock buybacks, financed with borrowed taxpayer money.

    Of course, if the markets break, all that recently acquired equity drops in value, erasing the value of the buybacks and frittering away prosperity. But the traders got their commissions and the CEO's got their bonuses. Who cares what happens to the businesses or the employees.
     
    Last edited: Feb 20, 2019
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  13. struth

    struth Well-Known Member

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    I love it when I make money off my stocks!!!
     
  14. Spooky

    Spooky Well-Known Member Donor

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    So Trump's economy boomed even more than Obama's so it makes sense there would be more stock buyback.

    If we follow your logic here.
     
  15. 61falcon

    61falcon Well-Known Member

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    And strangely they have not increased corporate wealth, as corporate debt right now is at an all time high of over 45% of our annual GDP.Corporate debt is higher now than in the tech bubble or the 2008 financial collapse.
     
  16. Doofenshmirtz

    Doofenshmirtz Well-Known Member Donor

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    Publicly traded companies have a legal obligation to their shareholders to increase profits. I hope you own shares!
     
  17. struth

    struth Well-Known Member

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    You’re right obama never promoted a tax cut for the middle class...he did vote and then over see a massive bailout for Wall Street
     
  18. HumbledPi

    HumbledPi Well-Known Member

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    So obviously you'll overlook the lie told by Trump that greatly reducing the tax burden on wealthy individuals and corporations would be helpful and beneficial to you and every other American? It was a giant lie from the get-go and Trump supporters were like "yay, look at me! I got another 50 bucks in my paycheck. So who cares about the rich tax break?" Why do you think our deficit has exploded and the national debt ballooned to $22 TRILLION?
     
  19. 61falcon

    61falcon Well-Known Member

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    Another way to enrich the already wealthy, as 84% of al stocks publicly traded are owned by our wealthiest 10% of citizens.Certyainly not enriching the masses.
     
  20. Andrew Jackson

    Andrew Jackson Well-Known Member

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    All of Trump's rich buddies are getting richer.

    Is anybody surprised by the corruption of this criminal grifter (Trump)?
     
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