Corporate profits in the last ten years and they are getting a 14% tax cut
White House Economic Advisor Gary Cohn had an awkward moment last Tuesday at a Wall Street Journal CEO Council meeting. Sitting on stage to promote the tax cuts, Cohn watched as the moderator asked the roomful of executives whether their companies would expand more if the tax bill passed.
When only a few hands rose, Cohn looked surprised and said, “Why aren’t the other hands up?”
So maybe they were distracted or needed a minute to think. Fair enough. A few hours later, White House Economist Kevin Hassett appeared at the same event and asked the same audience the same question.
He got the same result: only a few raised hands.
Former Brightcove CEO David Mendels explained how big companies view this in a November 10 LinkedIn post.
A tax cut for corporations will increase their profitability. Why we should believe that this increase in profitability will lead to wage increases when we have already seen that increases in profitability over the last 10 years did not, but rather went to stock buybacks and dividend increases that benefitted the investors?
As a CEO and member of the Board of Directors at a public company, I can tell you that if we had an increase in profitability, we would have been delighted, but it would not lead in and of itself to more hiring or an increase in wages. Again, we would hire more people if we saw growing demand for our products and services. We would raise salaries if that is what it took to hire and retain great people. But if we had a tax cut that led to higher profits absent those factors, we would ‘pocket it’ for our investors.”
By “pocket it,” Mendels means executive bonuses, share buybacks, or higher dividends.
https://www.forbes.com/sites/patrickwwa ... a3a6982ce0
. Trumps not lying to me.... He's lying to his supporters.