Florida senator and former presidential candidate Marco Rubio has become the latest Republican to attack the Trump company tax cuts as evidence mounts that the predicted investment surge from them has failed to appear.
“There is still a lot of thinking on the right that if big corporations are happy, they’re going to take the money they’re saving and reinvest it in American workers,” Rubio told the Economist in a profile piece. “In fact they bought back shares, a few gave out bonuses; there’s no evidence whatsoever that the money’s been massively poured back into the American worker.”
The comments from the Florida Republican contradict the core narrative of company tax cut proponents in the United States and in the Turnbull government, the Business Council and media commentators — that cashed-up companies will lift investment that will flow through to additional jobs, pushing wages up. In fact, as the Business Council showed last week, there are no cases from around the world where company tax cuts have ever led to higher wages; if anything, evidence from the United Kingdom shows real wages falling as companies get windfalls from governments.
Recent economic data reported in the New York Times appears to back up Rubio’s criticism: investment by US business in the first quarter of 2018 was significantly lower than in the comparable period in 2017. However, share buybacks have reached record levels — up over 50% on 2017 — as companies shower the tax cut windfall on investors. Apple’s stock price has been buoyed by expectations that the company will hand $150 billion of its tax windfall back to stockholders.
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