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Tuesday, March 19, 2024
March 19, 2024

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Jayne: So far, average American sees little benefit from tax cuts

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It is time for an update. You know, because we just never get tired of all the winning. So allow us to take a look at how the tax cuts passed by Congress and signed by President Trump late last year are doing.

Republicans assured us that tax cuts for corporations would lead to an explosion of hiring and investment in American workers. That it would keep jobs from going overseas and would allow U.S. industry to compete in the global marketplace. Because Walmart, for one example, was having a heck of a time competing with annual revenue of about $500 billion.

Rep. Jaime Herrera Beutler, R-Battle Ground, insisted that these tax cuts were necessary. “We read about the ‘recovery’ from the great recession that may be benefiting Wall Street, but hasn’t boosted workers’ take-home pay or helped enough of the families continuing to live paycheck to paycheck,” she wrote after voting in favor of the bill.

With Walmart saving an estimated $2.5 billion in taxes, the cuts surely would help Main Street more than Wall Street, right?

Maybe it would, if Walmart were not making a $20 billion investment in stock buybacks. And maybe if Walmart were not closing 63 Sam’s Club stores and laying off thousands of employees. And maybe if Walmart’s base pay for its 1.4 million employees were not below the federal poverty line for a family of three.

Walmart is only one corporation, even if it is the largest retailer in the United States. Surely the tax cuts for other companies are trickling down to salt-of-the-earth workers, right? Well, maybe not at Harley-Davidson, which is taking its tax savings, implementing a $700 million stock buyback plan, closing a plant in Kansas City, and increasing operations overseas.

But maybe elsewhere, so let’s ask Sen. Marco Rubio, R-Fla., who typically echoes Republican talking points, er, um, typically takes a nuanced and well-considered view of the issues.

“There is still a lot of thinking on the right that if big corporations are happy, they’re going to take the money they’re saving and reinvest it in American workers,” Rubio recently told the Economist. “In fact they bought back shares, a few gave out bonuses; there’s no evidence whatsoever that money’s been massively poured back into the American worker.”

Oh.

Well, what does he know? Let’s ask Mark Zandi, chief economist at Moody’s Analytics. “There is nothing to suggest the tax law is lifting investment in any substantive way, at least so far,” he said.

It’s all a sham

OK, so maybe the tax cuts were nothing more than a sham to benefit stockholders and the wealthy. A Bloomberg analysis estimates that about 60 percent of tax-cut gains will go to shareholders, and 15 percent to employees.

Stock buybacks are not necessarily a bad thing. But when various analyses estimate that the wealthiest 10 percent of Americans own 80 percent of corporate stock, well, those buybacks are not doing a lot for the average worker.

Meanwhile, the average worker is paying for those tax cuts. From January through March, the U.S. Treasury borrowed $488 billion, a record for that time period. Last month, the nonpartisan Congressional Budget Office estimated that the federal deficit will approach $1 trillion next year, despite a fairly robust economy. Investors are reaping the benefits of tax cuts being purchased on the national credit card we all share.

All of which should be huge issues for the November midterms — provided the public has a long enough memory and cares enough to make them issues. That could be problematic. Getting the public to believe that tax policy is more important than whether or not football players stand for the national anthem can be a Sisyphean task.

But it is important. And it is curious that Herrera Beutler once supported a balanced-budget amendment under a Democratic president and now boasts about tax cuts that balloon the deficit. And along the way, most of us are not winning at all from the Republican tax cuts.

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