Republican Tax Bill

Floor Speech

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Mr. SCHUMER. Mr. President, finally, today is tax day. That is probably America's least favorite holiday. It is appropriate today to look back at what has happened since the Republicans passed their tax bill last year. Since the beginning of the tax debate, Republicans have insisted their bill is about cutting taxes for working Americans. Even though the crux of their bill was a massive corporate tax cut, they said that workers would benefit the most. Even though it would direct 83 percent of the benefits to the top 1 percent, they said that the bill would be a ``middle-class miracle.''

How many middle-class people today think that tax bill is a miracle? Not many. The only way that could have been true was if corporations had decided to invest a substantial amount of their newfound profits in workers. That is what Republicans, after all, argued would happen.

We Democrats warned that if you gave the big corporations the lion's share of the tax cuts, corporations would do what they always do when they have higher profits and extra cash--distribute it amongst themselves, have a nice little party. Unfortunately, the evidence is mounting that our predictions, as much as we wish they hadn't come true, were prescient.

Since the passage of the tax bill--listen to this--corporations have spent over $250 billion on share buybacks. That is putting corporations on track to spend between $800 billion and $1 trillion on share buybacks this year alone, outstripping the previous pace.

People may ask: What is a share buyback? Here is what it is. A corporation has a lot of money. Some things they can do are pay workers more, give family leave, treat their employees better. Another thing they could do is invest in new plants and equipment, new training to make that corporation more efficient and to sell more of its goods. Those are good things.

What is a bad thing? Buying back the stock. What is buying back the stock? The corporation says: We have a million shares outstanding. If we buy back 100,000 of them, the price of the remaining ones will go up.

Who benefits? Above all, those who have a lot of the stock shares-- the CEOs of the corporations and the wealthiest heads of those companies. Who else benefits? Shareholders. Eighty percent of all shares in America, despite pensions and despite 401(k)s, are held by the 10 percent--the richest people in America. And one-third of all shares, totally, go to people overseas. That is who benefits from stock buybacks: corporate CEOs, wealthy shareholders, people overseas--more than the average American worker. That is what has happened.

Listen to this. According to a recent analysis by JUST Capital, only 6 percent of the capital allocated by companies from the tax bill's savings has gone to employees, while nearly 60 percent has gone to shareholders. That statistic gets to the very core of the debate. Who benefited from the tax bill? It was mainly wealthy CEOs, a lot of foreigners, and the wealthiest people in America--not the average working person.

As USA Today put it last week:

The number of companies letting workers know they are getting a bonus, raise or other form of financial compensation has slowed to a trickle. Most of the extra cash from tax savings is going into the pockets of stock shareholders through dividend increases and companies buying back their own stock in hopes of boosting its price.

The whole theory of the Republican tax bill can be summed up in two words: ``trickle down.'' The whole theory was to lavish corporations and the already wealthy with tax cuts and maybe the benefits might trickle down to everyone else. We are already seeing the balloon burst on that idea as corporations dedicate an enormous percentage of the tax savings to stock buybacks and only a sliver to worker compensation. That is why the Republican bill is not popular. A poll out from NBC News/Wall Street Journal--Wall Street Journal, hardly a working man's newspaper--showed that only 27 percent of Americans think the tax cuts were a good idea. That is fitting news on tax day, one of the least popular days of the year.

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