Hours after the House and Senate passed a tax bill that dramatically reduced the corporate tax rate, a slew of corporations, including Boeing, AT&T, Wells Fargo, and Comcast, announced bonuses, increased wages, and capital expenditure increases. The move was greeted by Republicans and others in the business community as proof that the tax bill wouldn’t just go to paying for stock buybacks—it would trickle down to workers, just as the GOP promised. “This is exciting stuff. This is good. This is not just a whole bunch of guys saying I can buy back a lot of stock here and jazz up my numbers through financial engineering,” banking analyst Dick Bove told CNBC. “This is a bunch of business leaders saying we can use this tax benefit to grow our company, keep our loyal employees and assist the community.”
But that’s not what’s really happening. The moves announced yesterday were all in the works before the tax bill passed. Wells Fargo, for instance, has announced similar minimum wage increases for the last two years; other changes would have been negotiated with unions and would have been in the works for quite a while. By announcing these changes now, these corporations will gain favor with the Trump administration and the GOP and some good PR.
And that good PR may come in handy down the line, when it becomes clear that the promises of trickle down growth never materialize. Aside from having nothing to do with the passage of the tax bill, this level of spending—$1,000 bonuses, for example—are a drop in the bucket, compared to the windfall these corporations can expect. And they won’t use that new money to invest in workers or infrastructure. They’ll use it to buy back stock and jazz up numbers through financial engineering.