The tax reform bill that passed Congress just before Christmas is, so we’re told, a win-win-win. It will be a bonanza for everyone — workers, small business, corporations. In the coming years, we’ll all be bathing in a new prosperity, an extraordinary, unprecedented future the likes of which we have never seen.
So how did Donald Trump, Mitch McConnell, and Paul Ryan pull off such a miracle? The same way they have done just about everything since taking over in early 2017.
The bill was drafted and enacted in what passes for democracy in Washington these days — with no hearings, and no input from the public or the other side of the aisle. Trump, McConnell, and Ryan were intent — from the day they won control of both houses — on lowering the corporate tax rate. Then they spent months deceptively dressing it up as a boon to the middle and working classes.
Despite their attempt at unadulterated subterfuge, the public saw right through it, which is why voters in a new Quinnipiac Poll rejected the tax plan 2 to 1, with only 25% approving it. The people understand it’s just another massive handout to wealthy donors at the expense of workers.
We’ve seen this same show many times before. The money, of course, won’t trickle down, as it never does, but it hasn’t taken long for the truth to trickle out.
In an attempt to bolster the charade, some companies almost immediately put their PR machines in gear and loudly announced nominal year-end bonuses for workers that amounted to a minuscule fraction of the tax windfall that’s coming their way (83% of the tax cuts will go to corporations and the wealthy by 2027). Bonuses are nice and can be an important tool in celebrating performance — year end or holiday bonuses are nothing new — but they are the shallowest investment in workers. They limit corporate costs because, by definition, a bonus is a one-time payment.
Meanwhile, Pharmaceutical giant Pfizer signed off on $10 billion in share repurchases to enrich its investors, while announcing it was shutting down work on Parkinson’s and Alzheimer’s diseases and laying off 300 researchers. Oracle launched a $12 billion buyback program. Within two weeks of the bill’s passage, corporate buybacks had reached more than $70 billion and were continuing to grow.
Wells Fargo CEO Tim Sloan summed up the trend nicely in an interview with CNN Money: “Is it our goal to increase return to our shareholders and do we have an excess amount of capital? The answer to both is, yes.”
Days after the he voted in favor of the tax plan, Florida Senator Marco Rubio admitted it “probably went too far” in cutting corporate taxes. He acknowledged that paying out dividends “isn’t going to create dramatic economic growth.” Even someone like Rubio who voted for the thing could only hold his nose so long before admitting what most of the public already knew.
If corporations really cared enough to support their workers, they’d use their windfall to make permanent improvements for their employees. Instead of buy-backs, for instance, they could:
- actually raise wages (a few companies did offer hourly pay increases to their workers, but they were the exception). Headlines yesterday celebrated: Wal-Mart Raises Hourly Wage to $11 in Wake of Tax Overhaul. Giving workers a real raise that they can count on is no doubt a step in the right direction. But let’s be real about why: Wal-Mart Inc. had announced it was raising wages three years ago, and the truth is that this move is in large part to stay competitive with Target … and to follow the law. The hourly inflation-adjusted wages received by the average worker have barely budged since the 1970s, growing at just 0.2 percent per year. A real raise permanently produces higher income that workers can count on year after year. And the higher new wages become a floor for future raises or which they can take to their next job.
- provide paid family leave and earned sick time. Investments like these can have a positive impact on the corporate bottom line by improving productivity, and employee retention, health and morale.
- provide health care or improve health care benefits. Workers shouldn’t have to worry about what happens if they get sick or the quality of their health care.
- invest in training their staff and giving them more responsibility, also good for productivity and retention.
- invest in employees’ retirement. No one has pensions anymore and America is facing a retirement savings crisis. Employers, especially of low and middle income Americans, can do what they do for the top brass and invest in employees’ retirement savings plans.
The tax bill is just the grossest example of the manipulation and abuse of trust that have so disgusted the American people. It’s one of the reasons voters have started to take matters into their own hands by increasingly using the ballot box to enact a vision of America they want for themselves and their families. In 2016, voters in six states supported ballot initiatives to raise the minimum wage, a move that that in just one year has put more than $3 billion into workers’ pockets.
For 2018, grassroots groups around the country have decided to go on offense in order to level the playing field for working Americans and oppose efforts in Washington and many state capitals to undermine workers’ standard of living. They are gathering signatures for ballot measures that would raise wages, enact paid medical leave and expand Medicaid coverage. Last November, Maine voters became the first in the nation to expand Medicaid through a ballot initiative, bringing health care to more than 70,000 additional people.
No one who works full-time should have to live in poverty, especially when they work for companies that are significantly richer today than they were just a few weeks ago. Nobody should have to worry about losing a paycheck because they have to take care of a sick child, or be unable to obtain health care for themselves or their family.
Ballot initiatives offer a real alternative to the Upside Down universe that is Washington, D.C. and too many other government institutions, where a lack of truth and justice have become the American way. It’s long past time to punch back, and that’s exactly what we intend to do in November 2018 in states across the country.