The Republicans want you to believe that deregulation and corporate tax cuts will create more investments, more middle-class jobs, and foster a better economy for everyone. But recently, corporate profits are at their highest level in 85 years while employee compensation is at the lowest relative level in 65 years. So where did this newfound corporate cash go?
The answer starts in 1982 when President Reagan’s Securities and Exchange Commissioner loosened the rules that define stock manipulation. This allowed corporations to purchase their own outstanding stock and remove it from the marketplace. Since profits were then shared with fewer stockholders, their stock price increased. This re-acquisition by a company of its own stock is known as stock buyback.
In February 2017, the Harvard Business Review reported that corporations used 54 percent of their earnings on stock buybacks and dividends absorbed 37 percent of their earnings. That left little for investment or higher income for employees.
The rise of excessive stock-based executive pay paints an ugly picture of greed, and Republican tax cuts will only create more corporate profits without middle-class prosperity. If you want America to be great again, fire Trump, stop voting for Republicans, and help the Democratic Party outlaw stock buybacks.
