President Donald Trump and the Republicans behind the tax overhaul have touted corporate tax cuts as a way to boost the economy by eventually allowing companies to add more jobs and pay higher wages.
But executives at major companies have said they will use the proposed corporate windfall to finance increased dividends or buy back their own shares, Bloomberg reported.
Bloomberg noted that Amgen CEO Robert Bradway said in an October that the company has been “actively returning capital in the form of growing dividend and buyback and I’d expect us to continue that” under the GOP tax plan. Other executives, including Coca-Cola CEO James Quincey, Pfizer CFO Frank D’Amelio and Cisco CFO Kelly Kramer have all said something similar.
“We’ll be able to get much more aggressive on the share buyback” if a corporate tax cut is passed, Kramer said earlier this month, according to Bloomberg.
Despite the Trump administration insisting that the corporate tax cut would benefit ordinary Americans, it appears that companies are more concerned with enriching their shareholders. In fact, during a Wall Street Journal summit of CEOs from around the country, a moderator asked if the tax cut would encourage the business leaders to make more capital investments (and thus stimulate the economy).
Only a few hands went up.
Trump economic advisor Gary Cohn seemed to be stunned.
“Why aren’t there more hands up?” he asked the audience.
Business leaders around the country have repeatedly given the Trump administration clear signals that the tax cut benefits will not reach the average American. They will serve to enrich already wealthy stock owners of these companies.
This certainly does not help the perception that Americans have of the bill, as polls show a majority of Americans already think the GOP tax plan only benefits the rich.
Not to mention, executives like Warren Buffet, Starbucks’ Howard Schultz and Blackrock’s Larry Fink have all spoken against the tax plan, and Goldman Sachs CEO Lloyd Blankfein said that given the current strength of the economy and employment levels, this is a poor time to enact tax cuts, Bloomberg reported.