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A Wave of Corporate Propaganda Is Boosting Trump’s Tax Cuts

Businesses saw that most Americans didn’t like the tax law at first. So they’ve gone on the offensive.

Joshua Holland

February 23, 2018

(Reuters / John Gress)

Three major business groups alone—the US Chamber of Commerce, the National Association of Realtors, and the Business Roundtable—spent $56 million in the last three months of 2017 lobbying Congress to give them a massive tax cut. According to Public Citizen, 6,243 lobbyists—more than half of the total number of active lobbyists in DC—worked on the bill, which works out to 11 for each and every lawmaker in Congress.

For their effort, they got massive, permanent cuts to the corporate-tax rate. Republicans had talked about closing loopholes so that their cuts wouldn’t blow up the deficit, but that fell by the wayside, and in the end we’ll mostly be financing this huge giveaway through public debt.

Now many of the corporations that lobbied for the bill are trying to make what began as a historically unpopular law more palatable with a series of high-profile announcements crediting the tax cuts for investments that they’d already planned to make or touting one-time bonuses for workers.

Exxon Mobil CEO Darren Woods penned a blog post crediting the tax bill for playing a major role in the company’s plans to invest $50 billion in the United States over the next five years. This generated a slew of headlines along the lines of the one that appeared in Reuters: “Exxon plans major U.S. investments due to tax reform: CEO.” But according to an analysis of the company’s financial statements by Americans for Tax Fairness, that’s actually $2.7 billion less than the company invested in the United States between 2012 and 2016. And Bloomberg reports that the company’s investments dipped in the last couple of years after oil prices crashed, and the capital-investment plan represents nothing more than “a return to the oil giant’s spending habits before crude suffered its worst price rout in a generation.” (The company’s “fourth-quarter profit nearly quintupled after President Trump’s tax cuts gave the oil giant a big lift,” according to USA Today.)

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Disney made headlines when it announced that it would give 125,000 theme-park workers a $1,000 bonus as a result of the cuts, but now the company is threatening to withhold those payouts from its unionized workers if they don’t accept an offer for a new contract with a 50-cent hourly wage increase—an offer the union rejected in December. The unions representing them are now accusing the media giant of illegal labor practices for holding the bonuses hostage.

Disney is just one of “scores of companies” that have announced similar bonuses in the wake of the tax law’s passage, according to The New York Times. But the Times adds that “a look at the fine print…shows that some of the largess is not nearly as large as company news releases suggest.”

It was probably Walmart that made the biggest waves when it announced that, thanks to the tax cuts, it was not only giving its employees a one-time bonus of $1,000 but also introducing an $11-per-hour minimum wage and new benefits like paid maternity leave.

But Walmart’s ostensible pro-employee moves aren’t all they’re cracked up to be. Only those with 20 years at the company are eligible for the full $1,000 bonus. The average tenure for a Walmart worker is 3.3 years, which would put $250 in a worker’s pocket. Even if that smaller bonus is helpful, it won’t offset other costs Walmart’s workers are likely to face, including state- and local-tax hikes to offset cuts in federal spending, or the 10 percent increase in health-insurance premiums that the Congressional Budget Office says will result from the tax bill.

And the bigger picture at Walmart is even more sobering. The retail giant has laid off tens of thousands of workers “at both the store and corporate level” since the announcement, according to Marketwatch. And it’s not alone—Comcast, AT&T, Pepsi, Kimberly-Clarke, and other firms have followed suit. And we can expect more of the same. One of the more perverse effects of Trump’s “America First” tax bill is that it incentivizes American multinationals to move production offshore.

And while most of the bill’s tax cuts for individuals are set to expire in 10 years, Walmart is expected to reap between $1 and $2 billion in tax savings from the bill every year under this new baseline.

Even taking as genuinely positive some components of Walmart’s announcement—the higher minimum wage and the paid maternity leave—are they actually linked to the tax cuts? Experts are dubious. Charles Fishman, author of The Walmart Effect, noted for Politico that the company actually said that, because of the cuts, it would “‘accelerate a few pieces of our investment plan’ in the United States, as if these moves might have been in the planning stages,” and added that “rolling out paid maternity leave across 4,752 stores is hardly something you can do in 20 days.”

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Economist Dean Baker says these announcements are “clearly public relations.” The story peddled by corporate America and the conservative media is that Trump’s tax breaks will encourage greater domestic investment, which will increase productivity and ultimately result in higher pay, but Baker says that “historically, investment has not been closely related to changes in after-tax income, and I see no reason to believe that” it will be different this time. He adds that even if the claims made by the law’s boosters were true, it would take a significant amount of time for the cuts to “trickle down” into working people’s paychecks.

In Walmart’s case, Baker argues that it’s more likely that the company is trying to retain workers in a tightening labor market—and in response to minimum-wage hikes across the country (18 states and more than 30 localities raised their minimum wages starting in January). “We hear all these employers complaining about it being hard to find workers, and while that may be exaggerated, it’s certainly harder to find workers in the context of a 4.1 percent unemployment rate than it was a few years ago when we were in the depths of the recession,” says Baker. “That does mean they have to raise wages, particularly if they want workers to stay—[turnover] is an especially big problem in low-paying sectors. If you don’t want to be constantly training new workers, there’s good reason to pay a little more, and I think that’s far more of a motivating factor than the tax cut.”

An analysis by Morgan Stanley earlier this month found that “only 13% of companies’ tax cut savings will go to pay raises, bonuses and employee benefits,” while “43% will go to investors in the form of stock buybacks and dividends.” That’s a very different picture than the one being painted by companies like Walmart, ExxonMobil, and Disney.

There’s a reason businesses are eager to tout purported benefits of the tax law for workers. “They know that the American public is deeply opposed to giving big tax breaks to corporations,” says Frank Clemente, executive director of Americans for Tax Fairness, says. “Everything the business community does in the normal course of business is going to be spun as a result of the tax breaks because they were reading the same polls that we were reading, and they knew that they needed to change this dynamic.”

The tax bill itself incentivized companies to announce bonuses right away. Because of a quirk written into the law, corporations could deduct bonuses if they announced them in 2017, but not if they offered them—or higher wages—in 2018. According to a post at the Center for Economic and Policy Research, “this means, in effect, that the government would have been paying these companies [14 percent of the value of a bonus] to announce [it] before the end of the year. Since we all believe that companies respond to incentives, it should not be surprising that many announced bonuses before the end of 2017.”

So Republicans in Congress incentivized companies to roll out these one-time bonuses, and that effort helped advance a multimillion-dollar PR campaign by the Koch brothers and the US Chamber of Commerce to turn around public opinion about the law. Together, the messaging appears to be having some impact: While the law remains relatively unpopular for a large package of tax cuts, The New York Times reported this week that it “now has more supporters than opponents,” which is “buoying Republican hopes for this year’s congressional elections.”

Is the increasing acceptance of the law the result of people receiving more take-home pay? It’s unlikely. Polls show that very few voters say they’ve actually noticed a bump in their paychecks, and “self-identified Republicans are more likely to say they have seen a larger paycheck under the new law” than Dems or independents, according to Politico.

At the same time, it appears that congressional Democrats are unsure about how or whether to keep attacking the law. The conservative media have worked hard to fabricate a scandal from prominent Dems’ rightly referring to these one-time bonuses as “crumbs,” painting them as elitists who dismiss the value of a few hundred bucks for cash-strapped working people; outlets like Breitbart and The Daily Caller have run virtually identical stories about the use of the phrase by Nancy Pelosi, Chuck Schumer, Andrew Cuomo and other Democrats. (Those articles are quickly followed, of course, by gripes that the mainstream media refuse to cover the nontroversy.)

Whether or not that narrative is having an effect—it appears to be—Dems seem head shy about attacking the law now that it’s passed, especially in the 10 Trump states where they’re defending Senate seats. But that’s a case of political malpractice—it should be easy to message against a law that finances massive tax cuts for corporations and the wealthy in part by stripping health insurance from 13 million Americans.

Democrats should take a page out of the Republican playbook on Obamacare and spend the next eight months explaining how the Republican tax “reforms” will ultimately hurt the very workers that corporate America and its allies on the right are claiming it’s helping. Unlike their opponents, they have the benefit of that claim’s being true. Unless they do, the spin coming out of corporate PR departments and the GOP is going to continue to go unchecked.

Joshua HollandTwitterJoshua Holland is a contributor to The Nation. He’s also the host of Politics and Reality Radio.


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