Tax The Rich! A Conference on Why & How
Tax Cuts Led To Stock Buybacks, Not Raises For Workers
Dr. Bill Lazonick discusses Predatory Value Extractors at TAX THE RICH! A Conference on Why & How, April 10, 2019.
Corporate stock buybacks reached a record-breaking $806.4 billion in 2018, thanks to the Republican tax bill. This is great news for the owners of those corporations, but not so much for the American workers still waiting for the $4,000 raise the GOP assured them.
Republican lawmakers told us that cutting corporate taxes would unleash a frenzy of job creation and pay hikes. Corporations would be opening up manufacturing plants and offices, hiring new workers, and have enough left over to give everyone a raise. In other words, we were supposed to believe the only reason they weren’t doing these things already was corporate taxes.
But corporations don’t exist to spend money, they exist to increase value for shareholders and profits for their owners, and giving workers a raise is not usually the first thing they turn to to make that happen. Buying back stocks (and the dividends that come with them) is a much more direct approach. After relying on investor money and employee labor to grow the value of their enterprise, they’ll buy back as much of it as they can to plump up their share of the profits before they share a red cent with the workers that got them there.