By Dana Balter | Published by Syracuse.com
There’s no question that New York’s working families deserve a tax cut. Congressman John Katko and his Republican colleagues told us that the tax bill they passed earlier this year would give us all tax cuts. They claimed that the average American family would see a $4,000 increase in their annual wages as a direct result of the bill. The facts tell a different story.
So far, about two dozen companies are offering bonuses to their employees. John Katko and his GOP colleagues want us to believe that’s cause for celebration. I’m sure you remember them proudly telling us that Home Depot is giving their employees thousand-dollar bonuses. Here’s what they’re not telling us. Home Depot said that only employees with 20 years on the job will be eligible for the $1,000 bonuses. Employees who have been with the company for two to four years (the average length of employment of most retail workers) are only eligible for $250 bonuses. And those bonuses will be taxed at 22 percent. To put it another way: If you have been working at Home Depot for four years, full time, you will end up with an extra $195 — an extra 9 cents per hour for a year’s worth of work.
So, if employees aren’t seeing the benefit, what are these large corporations doing with all of the money they’ve gotten from Katko’s tax bill? Stock buybacks. A stock buyback is when a company purchases, or buys back, shares of its own stock on the public market. (This was illegal until the Reagan administration.) Why should you care about stock buybacks? Because they don’t make the companies better or spur economic growth. They just put more money in the pockets of CEOs and shareholders, instead of workers. Let’s go back to the Home Depot example. Home Depot spent almost $22 billion (or 93 percent of their profits) on stock buybacks from 2015 to 2017. The average worker at Home Depot earned $21,095 in 2017. If the company had invested in their employees instead of buying back stocks, they could have given every single one of their employees an $18,000 (or 86 percent) annual raise.
You might think that since corporations are getting even more money this year from the Trump-Katko tax bill, things will be different. But in fact, stock buybacks have increased since the Trump-Katko tax bill passed and workers are seeing virtually no benefit from the law. Home Depot is spending just 1 percent of their windfall from the tax bill on their workers.
And Home Depot is only one example of hundreds of large corporations whose employees are getting nowhere near a fair share of the tax-cut. Adding insult to injury, some companies simultaneously announced closing stores or laying off workers. Walmart announced their bonuses and then closed four Sam’s Club stores in Upstate and the Southern Tier, including the store here in Syracuse, which left 151 people without jobs.
The Trump-Katko tax bill isn’t fair and it dramatically increases inequality. Trickle down economics doesn’t work. Economic experts by the dozens warned us about this when the bill was under consideration. But Katko chose to ignore their expertise and vote for the bill despite all the evidence of harm it would do to the people of central and western New York.
We need a representative who will be a true champion of working families and put the well-being of the American worker ahead of corporate greed. When ordinary people don’t have money in their pockets, they can’t spend money and the entire economy suffers. When they have money, they spend it and the economy grows. That means more jobs, higher wages and a better future for all of us. Taking care of our workers is how we create an economy that works for everyone.