Elizabeth Warren wasn't the only Democrat to make this claim. She was just the loudest and the most shrill, which is par for the course for her.
Cutting the corporate tax rate would do no good, they insisted, because CEOs wouldn't use the money to invest in growth, or employee wages, or new jobs . . . or pretty much anything good at all. They'd use it, according to Warren, on "stock buybacks." She claimed CEOs had told her that. The left in general claimed that the corporate tax cut would result in nothing more than big fat bonus checks for executives and dividend bonuses for shareholders.
Leaving aside the fact that dividend payouts to shareholders aren't necessarily bad things at all, those of us with experience in business knew better. Companies don't bust their butts earning cash just to hoard it. I've served on five corporate boards and the discussion was never about how to shrink or stay put. It was always about how to grow. That's what companies want to do.
So I knew that when Congress cut the corporate tax rate from 35 percent to 21 percent, companies would use the capital in a variety of different ways - depending on their individual growth goals. Some would invest in their existing employees to strengthen retention. Others would hire new people so the stronger workforce could boost productivity. Still more would use it for facility expansion, or for marketing, or for product development, or for training. Or for all of the above. Companies know what they need, and they will allocate newfound capital accordingly.
And it didn't take long to prove Senator Warren wrong. Already since the tax cut passed:
AT&T announced it will pay $1,000 bonuses to 200,000 employees.
Fifth Third Bancorp announced it will pay $1,000 bonuses to 13,500 employees.
Comcast announced it will give $1,000 bonuses to 1,000 employees.
Boeing announced it will allocate an additional $3 million for job training, facility upgrades and charitable giving.
Wells Fargo announced it will raise its lowest wage from $13.50 per hour to $15 per hour.
None of this surprises me. Each of these companies knows its priority needs.
Democrats and the media are having conniption fits because these corporations will be handing over less money to the government. But here's a question they are never made to answer: Why do they think the best thing that can happen to a company's earnings is to have it handed over to the government? Do they not understand that people benefit from other uses of corporate money?
Money a corporation doesn't give to the government can be used:
To hire people.
To pay existing employees more.
To let out contracts to other businesses, who can also grow and hire people.
To build new facilities, which create jobs and expand the tax base.
To develop new and better products that people want to buy.
To improve existing products and improve people's quality of life.
To give to charity.
To pay out dividends to shareholders, who can then use the cash to invest in more businesses that can use the cash.
And that's just for starters. Why does anyone think it does people more good to give the money to the government than it does to do any of the above things? That's insane. Just about everything a profitable corporation does with its capital is more productive and better for society in general than cutting a check to the government. And unless you think all good things come from government, that should be easy for you to understand.
But it's no surprise Elizabeth Warren and her fellow Democrats don't understand this. To them, all of life revolves around the government, and no use of a dollar is ever better than the use of it to pay taxes. The more of America's capital that goes to the government, the better, according to these people.
Considering how well the government manages its money - $20 trillion in debt! - I'm thinking maybe it's better if we reallocate as much capital as possible to people who will be more responsible with it. American corporations will certainly do that, and they're already doing it, much to the shock of Elizabeth Warren and her fellow travelers.
Elizabeth Warren wasn't the only Democrat to make this claim. She was just the loudest and the most shrill, which is par for the course for her.
Cutting the corporate tax rate would do no good, they insisted, because CEOs wouldn't use the money to invest in growth, or employee wages, or new jobs . . . or pretty much anything good at all. They'd use it, according to Warren, on "stock buybacks." She claimed CEOs had told her that. The left in general claimed that the corporate tax cut would result in nothing more than big fat bonus checks for executives and dividend bonuses for shareholders.
Leaving aside the fact that dividend payouts to shareholders aren't necessarily bad things at all, those of us with experience in business knew better. Companies don't bust their butts earning cash just to hoard it. I've served on five corporate boards and the discussion was never about how to shrink or stay put. It was always about how to grow. That's what companies want to do.
