I don’t understand this. How are the Trump tax cuts paying for their layoffs and factory closings?
Easy-peasy. In the early Seventies, MBA students learned all about how shareholder’s interests should be more important than society’s interests. Right as Watergate was blowing up, many MBA schools added coursework called “Business And Society” to teach ethics to sociopaths, and we all see how well that worked.
The MBA students who went to first tier schools are now the CEOs of large corporations. The candidates who went to all the other schools are local banksters, investment managers, and real estate swindlers. The elevation of Dear Leader Trump to the Presidency gave ALL of these MBA assholes and their minions license to do whatever they wanted.
The money gained from tax cuts will be used to either buy back stock or else passed out as dividends to shareholders. Increasing use of robots and imported products will end American manufacturing.
Read closer and pay attention. Not being snarky. It is counter-intuitive and economics is WAY more difficult than almost anyone thinks, including a lot of economists.
My reading of the post is this: in order to lay people off, K-C needs to have severance pay. The Trump tax cuts mean that they have enough free cash on hand to cover the severance for laying off 5500 people and also pay out some extra dividends to the shareholders.
I don’t know if K-C execs are trying to curry favor by attributing their actions to the tax bill, but I know for certain that at least one of the sites laying off most of its workers (Camas, WA) had announced the RIF publicly months ago - long before the tax bill was formulated, let alone approved.
Few feeling the trickle
I don’t want it back. I want it spent on broad social benefits like healthcare and education.
Yes, K-C execs had no idea tax cuts and a repatriation bill were in the works. No idea. None.
I don’t think you are misunderstanding at all. All we have to do is look at non-profits. Those are corporations that might as well have a tax rate of 100%. They hire employees and re-invest in themselves, as well as delivering on their corporate missions.
Why don’t we just have a 100% corporate tax rate and make everyone run like non-profits do? (Let me run the country and we’ll find out!) I think an economist would tell you that would never work, without investors businesses wouldn’t be able to start up and thrive. So the point of having a less than 100% tax rate is not to provide any incentive to the business to hire (it actually, as you say, provides a disincentive to spend money on wages). Instead it’s to provide room for businesses to provide incentives to investors to invest. Since not all money has to go to wages and re-investment, some of it can go to making investors rich.
So to get from tax cuts to lower wages you have to do the following:
- Lower taxes means that the same profit results in higher returns for investors.
- That means that a company could intentionally reduce it’s profit while providing the same returns to investors (and therefore the same incentive for them to invest).
- One way a company could lower it’s profit is by paying the excess to employees as wages.
That makes perfect sense, but could doesn’t translate to will. So saying that corporate tax cuts leads to hiring and higher wages is making some extremely bad assumptions about how corporations will behave, and hiding those assumptions by guessing that people won’t understand the reasoning that led them to where they are.
Thanks! That makes perfect sense.
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