Trump tax cuts are working out exactly as expected
A heavily-biased poll says voters love the big GOP tax cut.
The poll from the Job Creators Network (JCN) found that 90 percent of Republican voters, 61 percent of swing voters and 36 percent of Democratic voters think the tax law will have a positive effect on the economy.
The poll, conducted by Luntz Global, includes an over-sampling of Trump voters, Republicans and small business owners.
And what's not to love? The results of the tax cut are exactly what Trump promised they would be.
In terms of bringing money back home, the new tax law is proving some of its critics wrong.
Yes, companies are bringing their cash home. But was that ever in doubt?
The question is if the tax cuts would turn into jobs, and that's another story.
In September 2017, House Speaker Paul Ryan traveled to a Harley-Davidson plant in Menomonee Falls, Wisconsin, to tout the Republican tax bill, which President Trump would sign later that year. “Tax reform can put American manufacturers and American companies like Harley-Davidson on a much better footing to compete in the global economy and keep jobs here in America,” Ryan told workers and company leaders.
Four months later and 500 miles away in Kansas City, Missouri, 800 workers at a Harley-Davidson factory were told they would lose their jobs when the plant closed its doors and shifted operations to a facility in York, Pennsylvania — a net loss of 350 jobs. Workers and union representatives say they didn’t see it coming.
Just days later, the company announced a dividend increase and a stock buyback plan to repurchase 15 million of its shares, valued at about $696 million.
The corporate tax cuts aren't turning into wage hikes either.
Two months ago, there was no correlation between the size of tax cuts and wage gains across sectors. Now it’s strongly negative. Companies engaged in wholesale trade reduced wages, even though they’re supposed to save 40 percent during the next decade (according to the Penn Wharton Budget Model).
In fact, if you listen to what CEO's are actually saying, pay cuts and layoffs are in store.
If current conditions persist, corporations are likely this year to inject more than $2.5 trillion into what UBS strategists term "flow" — the combination of share buybacks, dividends, and mergers and acquisitions activity.
When all is said and done for 2018, UBS expects dividend issuance to top $500 billion, buybacks to range from $700 billion to $800 billion, and M&A to constitute about $1.3 trillion. If the numbers pan out, they would equate to about 10 percent of the S&P 500's market cap and 12.5 percent of GDP.
That's a whole lot of money not doing anything for the bottom 90%.