BOSTON (WBZ-AM) -- Forget everything else.
The biggest political and economic news of the moment is the $1.5 trillion tax cut signed into law by President Trump late last year, and the still unanswered question of who is going to benefit from it.
No one disputes that most of the windfall goes to corporations. But the Republican argument is that the massive corporate tax cuts will spur job-creating and wage-hiking investments in new companies and factories, a boom that will have positive ripple effects across the economy.
That all sounds good, and if it comes true, Mr. Trump and the Republicans will surely reap the political rewards.
But there is a troubling early sign of what’s actually happening with that money that should prompt everyone to pay close attention.
According to the New York Times, “so far, companies are using much of the money for something with a more narrow benefit: buying their own shares. Those so-called buybacks are good for shareholders, including the senior executives who tend to be big owners of their companies’ stock…. But the purchases can come at the expense of investments…[and] are also most likely to worsen economic inequality because the benefits of stocks purchases flow disproportionately to the richest Americans.”
This is the same thing that happened in 2005 when a one-off tax holiday was promoted by then-President Bush as a way to jump-start economic growth.
About $300 billion was repatriated from overseas. An estimated 92% of it went to company stockholders through buybacks.
This is the moment of truth for corporate America.
Are you really the greed-crazed hoarders your worst critics say you are, or are you going to share the wealth?
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