Where Are Trump’s Corporate Tax Cuts Going? Companies Spending 13 Percent On Employees, The Rest On Themselves

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Donald Trump’s tax cuts have started to make their way into the paychecks of working Americans, but a new analysis finds that companies only plan to spend about 13 percent of their corporate tax cuts enriching the salaries of employees — and the rest on themselves.

The $1.5 trillion tax overhaul was sold to voters as a middle-class tax relief effort and a boost to an already strong economy, and within the first few weeks a series of companies announced bonuses for employees that came through the corporate tax cuts. The right-leaning Americans for Tax Reform group noted that more than 200 companies awarded these bonuses, which ended up in the pockets of 3 million Americans, Reuters reported.

But critics say that the majority of the money from the tax cuts will be enriching the richest Americans and large corporations, and now statistics are starting to back that argument. An analysis of companies conducted by Morgan Stanley Research found that companies plan to spend about 13 percent of their tax gains on employees, with the other 87 percent going directly back into the company. The largest portion of the cuts — 43 percent in all — were going to stock buybacks, the analysis found.

This analysis was shared Friday by Jim Tankersley, a financial reporter with the New York Times.


The Trump tax cuts have already been generating plenty of controversies. Earlier this month, House Speaker Paul Ryan took to Twitter to brag about a secretary quoted in an Associated Press story who was making an extra $1.50 each week thanks to the tax cuts. Ryan was inundated with criticism for the tweet, which he later deleted.

Robert Reich, who served in three presidential administrations including labor secretary under Bill Clinton, said Trump’s tax cuts are really just a reward for companies. Writing for AlterNet, Reich said that Trump’s promise that companies will use tax cuts to make investments and help raise workers’ wages was “about as truthful as his promise to release his tax returns.”

“The results are coming in, and guess what? Almost all the extra money is going into stock buybacks,” Reich wrote. “Since the tax cut became law, buy-backs have surged to $88.6 billion. That’s more than double the number of buybacks in the same period last year, according to data provided by Birinyi Associates.”

Reich said he believes that Trump tax cuts will continue to enrich companies rather than employees, with more stock buybacks in the coming years as these companies pour their savings back into their own bottom line.