The Atlantic, at the beginning of December 2017, published a piece that outlined the “7 myths of the GOP Tax Bill.” Among the seven alleged myths, The Atlantic reported that companies would not invest money in their workers by giving them a raise.
However, since the tax reform bill was passed and signed into law, multiple companies have announced investment and pay bonuses for their workers going into 2018.
Here is the list of companies, compiled by Freedom Partners (a pro-free market oriented organization affiliated with the Koch network of organizations) which have made the announcement of giving bonuses to their workers:
- Bank of America
- Fifth Third Bancorp
- Wells Fargo
- Sinclair Broadcasting
- Southwest Airlines
- American Airlines
Specifically, The Atlantic wrote the following:
Cutting the corporate tax rate will lead businesses to give raises to regular workers.
The Republican legislation would slash the corporate tax rate from 35 percent to 20 percent, along with eliminating a number of deductions for businesses and tinkering with what gets taxed and when. “It is great for companies, because companies are going to bring back jobs. And we’re lowering the rates, very substantially. But right now, we’re bringing the rates down from 35 percent—which is totally noncompetitive. The highest industrialized nation in the world, by far, and we’re bringing it all the way down to 20 percent,” Trump said this week. “But that’s good for everybody in the room, whether you have company or whether you want a job.”
The idea is that the lower tax rates would encourage businesses to stop using tax shelters overseas and would provide companies with more money to shunt to their workers. Trump’s Council of Economic Advisers has suggested that the corporate tax reform would boost the average family’s income by $4,000 a year, “conservatively.” But that number does not hold up to scrutiny, with most nonpartisan budget scorekeepers and many economists contending that businesses would provide a far smaller bump to average workers. That White House analysis assumes that workers would get 70 percent of the benefit of the rate cut, with shareholders getting the remainder. The Tax Policy Center, a Washington-based think tank, for instance, estimates that workers would get about 20 percent of the value of corporate rate cuts, with the JCT, the Congressional Budget Office, and the Treasury all estimating that workers would get around a quarter of the benefit too. The rest would go to shareholders. Plus, of the money going to workers, much of it would flow to managers and executives, not minimum-wage or average employees.
The Center on Budget and Policy Priorities, a respected left-of-center think tank, has said that researchers view the White House’s analysis “with considerable skepticism due to its methodological weaknesses,” and describes its assumptions as “unrealistic.”
In case you were wondering, here is the list of The Atlantic’s alleged seven myths of the tax reform law from the article:
- “The tax bill will pay for itself”
- “It will supercharge growth”
- “Cutting the corporate tax rate will lead businesses to give raises to regular workers”
- “Corporations will invest more”
- “The rich are not going to benefit from this bill”
- “Trump himself would not benefit”
- “The plan is designed for the middle class”