President Trump is cheerleading for corporate tax cuts as part of his effort to make America grate, asserting that tax relief would encourage businesses to invest, expand, hire, and boost wages.
But while cutting the 35-percent corporate rate may be perfectly logical if loopholes are eliminated and the plan is revenue neutral, his first problem is producing evidence that the freed-up capital would be used to benefit the American workers.
Most companies already use loopholes to pay far less than the statutory rate.
And with corporate profits already at record highs, a CEO would be investing if he were so inclined.
So there is very little evidence that the lion's share of a tax savings would go to anyone but shareholders.
The Institute for Policy Studies confirmed all that last week, in a report that serves as a cogent lesson for Labor Day 2017.
The D.C. think tank looked at the payroll changes at 92 corporations that posted profits every year from 2008 to 2015 and paid less than 20 percent in federal income tax. These corporate giants - telecoms, banks, defense contractors and the like - were all profitable and paid taxes generally what the President (15 percent) and congressional Republicans (20 percent) will seek in the reform package, so they are a good sample.
As Sarah Anderson of IPS explained, "If claims about the job creation benefits of lower tax rates had any validity, the 92 consistently profitable tax-dodging firms we identified would be among the nation's strongest job creators."
Spoiler alert: It's not happening.
These 92 monoliths didn't use their lower rates to create jobs. They actually combined to cut jobs by 0.74 percent over that nine-year study period, while the private sector was adding jobs at a 6 percent increase. In other words, the big tax winners were the hiring losers.
AT&T is a classic example. The IPC noted that CEO Randall Stephenson recently predicted that if the tax on corporate profits were cut to 20 percent, "I know exactly what AT&T would do - we'd invest more." And that every $1 billion in tax savings would create 7,000 jobs, he added.
He failed to mention that AT&T already paid an effective tax rate of 8 percent between 2008 and 2015; and that despite those massive savings, it still downsized by 80,000 jobs during that period.
Or consider 21st Century Fox: It paid at a 15.6-percent tax rate between 2008 and 2016, yet it eliminated almost half its workforce in that period.
What do these corporations do with their new cash?
If they don't stash it overseas, it usually goes to executive salaries. Those 92 corporations raised CEO pay 18% from 2008 to 2016, and if you were a CEO of a company that cut jobs, you fared even better. The workers? They got a 4 percent pay increase.
And IPS found that AT&T has spent $34 billion repurchasing its own stock since 2008, which artificially inflates its value, instead of investing in the company or the workforce.
So Trump's claim that a massive corporate tax cut will boost wages has no basis in fact - or logic, if you give credence to the bullet points proffered.
Given the record profits and booming stock market, it's not clear that corporate America needs a tax cut. It overwhelmingly benefits the donor class, and has few benefits for those who need it most. Meanwhile, minority party, which is not inclined to help the rich, has just been gift-wrapped a political cudgel in the form of deficit explosion.
So there is a sizable conflict between the political environment and policy requirements.
It makes you wonder whether it would be useful for the president to propose something that benefits both management and labor - perhaps something that would compel both parties to re-explore the possibilities of an American dream once again driven by a robust middle class. If only.
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