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Why you’re not experiencing the Trump “economic miracle”

“It’s an economic miracle,” the president raved at last month’s State of the Union address. “In just over two years since the election, we have launched an unprecedented economic boom, a boom that has rarely been seen before. There has been nothing like it.”

Yep, take a look at any graph showing GDP and job growth and you’ll see two very nice upward slopes. But not for the past two years, for the past 20. And, yes, it’s true that wages are rising faster than they have in a decade but that’s primarily because the US economy was in freefall ten years ago. To compare 2019 wage growth to a 2009 standard is disingenuous at best. And when you factor in a 1.5 percent inflation rate, workers’ wages only grew about 1.7 percent in the past year. While everything that really matters is costing more and more. Feeling the miracle yet?

The only miracle here is how the sketchily-rich and dubiously-powerful have managed yet again to foist off another tax cut that almost solely aggrandizes them while leaving the American worker holding a trillion dollar IOU.

According to Axios.com, productivity (the ratio of goods and services created for a standard unit of work) is not the problem. “The issue driving income inequality in the U.S. has not been a lack of productivity by American workers, a new report from the Economic Policy Institute (EPI) finds. Instead it is that the lion’s share of gains from increased productivity have gone to a tiny segment of wage earners at the top.”

It’s easy to see what’s going on. From 1979 to 2017 US worker productivity grew over 70% while hourly compensation of grew at barely 10%. Yes, your math is right. For the non-fatcat worker, productivity grew nearly seven times faster than what bosses and owners deigned to pay the people who made them the cushy piles of dough they’re sitting on.

Cast your memory back to November 2017 when the president assured Americans that slashing taxes on corporations and private businesses would provide the “rocket fuel our economy needs to soar higher than ever before.” “And when Trump signed the tax bill on December 22, 2017 in the Oval Office,” writes Alexia Fernández Campbell at Vox.com, “he also promised that businesses would invest those tax savings in their businesses and give ‘billions and billions of dollars away to their workers.’ He pointed to a handful of big companies that promised to raise wages and give employees $1,000 cash bonuses — among them Walmart, Bank of America, and Comcast. More than a year later, economic data shows that the tax bill’s benefit to workers never materialized.”

“This how they’re doing it,” Axios continues. “Companies already were able to chip away at their effective tax rate when the top rate was 35%. The new rate of 21% approved under the Trump-backed legislation got them much lower.” Then all the loopholes — virtually none of which were eliminated by the tax bill, as promised — kick in like sugar on lollypop. 

According to the Institute on Taxation and Economic Policy:

    GM is claiming a $104 million refund on $11.8 billion in 2018 profit.

    Goodyear is seeking a $15 million refund on $693 million in profit.

    Halliburton will pay $19 million in U.S. income taxes on $1.6 billion.

    Netflix filed for a $22.1 million refund on $845 million.

    U.S. Steel is claiming a $303 million refund on $957 million.

    And Amazon is seeking a $129 million refund on $11.2 billion. 

It’s not that these companies are breaking the law; they’re adhering fastidiously to the laws they and entities like them lobbied to have written.

There was a time when worker productivity and wages were tied together like pedals on a bicycle. One pushed the other; both benefited equally. Business owners and shareholders acquitted themselves with a modicum of fairness, the nerves controlling pangs of conscience not yet having been desensitized. Then came the 1980s “greed is good” mentality the nation and much of the world is suffering at present.

So, at what point do Americans — the right especially — finally clue-in to what is going on and say enough is enough? When future ratios of worker productivity to wages earned are not 7-to-1, but 15-to-1? 25-to-1? 50-to-1?

You almost can’t blame them. Corporations are like sharks and we’re the chum. Like scorpions, crossing the river on our backs. They’ll go right ahead and keep right on doing what they’re doing.

Until we make them stop.

 * * * 

Multiple award-winning author Charles Caratti (Carr) writes and edits for many well-known publications. Also a noted playwright and director, Caratti’s works have been performed at premiere venues across SoCal. Contact him at charlescarr.com.

*Note: Opinions expressed by columnists and letter writers are those of the writers and not necessarily those of the newspaper.

One response to “Why you’re not experiencing the Trump “economic miracle””

  1. carl swadell says:

    You eagerly say the economic slope has to be measured over time, but then you want to study a simple snapshot in time when it comes to business financials. You then conclude (erroneous) information about policy from that dishonest approach. One obviously cannot properly judge a company’s health or wealth or even taxes owed and paid, from a single annual report – look at perhaps 3 years of data to get the full picture. Research & Development, equipment purchases, tenant improvements, product rollout, carried-over losses… just a few of the many factors involved in compiling a financial statement.

    You have fully omitted the taxes paid by these corporations, and choose to use… something different. I am not a financial expert or even a “savvy investor”, but I am a small business owner who can read a P&L report. The published 2018 financials for the companies referenced in this article are available online at multiple locations (you don’t need to cite ITEP for “interpreted” information – I would think one’s first instinct is to look at the original data). Maybe you still don’t like their profit and deductions and their accounting practices, but that is a basis for a different discussion. Here are the facts used by average people to make investment decisions, and used by the companies to pay out their dividends to shareholders:

    GM paid 474M in tax, with 8.08B in net profit (5.5% of their gross sales)
    GT paid 303M in tax, with 693M in net profit (4.5% of gross sales)
    HAL paid 157M in tax, with 1.7B in net profit (7% of gross sales)
    NFLX paid 15.2M in tax, with 1.2B in net profit (8% of gross sales)
    X (USS) claims 303M in refund, with 1.12B in net profit (8% of gross sales)
    AMZN paid 1.2B in tax, with 10.1B in net profit (4% of gross sales)

    The only one NOT paying taxes this year is US Steel; why? Well, you need to go back a few years to evaluate that. GM’s income is 1/3 less than 2016 – does that factor into your equation? I don’t understand your use of the “millions refunded”; compared to what they “should” have paid? The most profitable companies yielded just 8% profit from their gross sales in 2018. Not exactly “paycheck-loan” or “credit-card-interest” kind of returns! Also, you specify Halliburton’s tax as U.S.-only, but then use their worldwide profit – you need to be consistent with figures if you want to elicit useful conclusions. By the way, I think every company on that list has both domestic and international income and taxes.

    I am not sure why you are not personally benefiting from the new tax laws, but most people are, including nearly everyone in my work and social universe. Millions of people received unexpected bonuses, most have had more money in their pockets with each paycheck in 2018 with less deducted from their pay and, despite the smaller paycheck deductions, tax refunds are bigger than last year for average taxpayers. I don’t want to argue your opinion, because everyone has a right to be wrong. I freely admit that I don’t know if the tax cuts will be beneficial in the long-term (no one does!), but in the short term they are proving to be mostly beneficial to average taxpayers and the corporations who hire those people and pay dividends to the people who “loaned” them operating capital (i.e., non-savvy investors like me). I don’t have an agenda, except trying to use real information to make an informed decision, and asking dishonest opiners not to cherry-pick facts just to bolster a class-war agenda that is divisive at best.

    I don’t want to waste my time figuring out where ITEP got the figures you used in the article, but they generally tend to report that tax cuts are inherently bad, and tax increases inherently good – despite pretty decisive proof to the contrary. So in a phrase, “not reliable”. Your willingness to use misleading information invalidates all your other conclusions and data, whether or not they were otherwise thoughtful or valid.

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