Effects of tax cut? Maximize Shareholder Value

Here is an interesting article breaking down the effects of the tax cuts on Wells Fargo

http://rooseveltinstitute.org/what-wells-fargos-40-6-billion-stock-buybacks-could-have-meant-its-employees-and-customers/

Firstly, my opinion is that Wells Fargo should have been broken up a year ago and a good many of the executives should be in jail on racketeering charges… but that is neither here not there.

Since the tax cut was passed Wells Fargo has authorized $40.6 billion in stock buybacks while laying off 26,500 jobs since the tax cuts were passed.

To break that down, Wells Fargo, who did recently announce that it will raise the pay of it’s lower wage workers https://www.charlotteobserver.com/news/business/banking/article207010029.html has cut back on the amount of workers that it employs while knowing that If it divided all of that stock buyback money equally among all of it’s workers, that would amount to each employee receiving $154,000.

Let that sink in. Most of the employees could have had a life changing amount of money out of what the CEO said was " an excess of capital".

Thank of also how this dispursement of excess capital to labor would be taxed at a higher rate than to those that make income off of capital. The tax code not only rewards this type of dispersment of capital it ensures that this type of dispursement is taxed at a lower level than paying it out to employees.

This is why the phrase " maximize shareholder value" is the most dangerous words uttered for the American worker and an example of how the desired effects if the tax code is a failure.

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I put this out a couple of days ago and thought it was interesting… but there was some election drama and a little thing like the Attorney General kerfuffle… so I am bumping it to see if there is any interest.

Yeah… the numbers in this case are pretty stark.

Now I would never think that a dispersement of excess capital should be split evenly towards labor… I think it would be great… but I am a realist and it would never happen, but the numbers here are pretty hard to get around.

It shows that the rounds of employee bonuses right after the tax bill were publicity stunts.

Here is one effect of the tax cuts…

Which is really not all that surprising, as these corporations were already seeing record profits as is.

It’s almost like if the tax cuts were directed at the middle and lower classes instead of the people who already have a ton money it might have had a better effect on the economy.

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Exactly. And the amazing thing is that had the GOP actually enacted broad middle class tax cuts that were very noticeable across the majority of American households, they may have even preserved their Majority in the House and picked up even more Senate seats. But appeasing the donor class was more important apparently.

Well, they had to appease the donor class.

Lindsey Graham said as much.

But it’s really all John McCain’s fault they lost the House. :wink:

i bank at wells fargo

on saturday i got a fat email about a class action law suit against them

i guess i had better read it

In regards to the job cuts:

What your saying is companies should keep employee’s they no longer need working just because?

I know of three banks/credit unions where I live, they keep getting more and more automated. Example, the institution I use when I first signed up had three tellers working the three drive through lanes. Now they have one because they re-did the drive through area and the lanes have camera’s and screen’s to see what’s going on for teller/patron.

Should this institution have kept the other two tellers (and they are remodeling all their branches to this type of drive through)?

As predicted. But there was a certain poster who said we had to “wait and see” what would be obvious, that corps would use the savings for stock buybacks primarily and it wouldn’t make wages go up.

So, we waited and we saw. Duh. I’m guessing we have to keep waiting to see.

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Not what I am saying at all.

What I am trying to demonstrate is that companies like Wells Fargo who are spending the excess capital on share buybacks are being subsidized by the rest of us at the expense of the common worker.

The tax cut is not seeing the trickle down to the employees because it was expressly designed to encourage the type of behavior that we see here.

It is further harmful to the citizenry because that type of economic behavior of plowing excess capital into unearned income means that that money gets taxed at a much lower rate than if the excess capital would be dispersed to the workers.

It show that trickle down is crap.

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i never bought trickle down even when reagan said it

it sounded like a load then and it sounds like a load now

i shouldnt need that excuse to want a tax cut

heh budda heh budda bubbada, uhhh, duhhh, Trump is getting rid of all dose regulations. And I like mo money in my pocket. duuuhhhhrrrr.

And. ow you see why I can vote for the gop…its never for the little guy…

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So the shareholders are getting a bag of cash, taxed at a lower rate (according to you).

What are they doing with this bag of cash? Are they socking it away in a bank account? Are they buying different stocks (aka putting money into someone else’s pocket)? Are they going out and buying things?

It is taxed at a lower rate because that is how our tax system works. Unearned income is taxed at a lower rate than earned income.

They are buying things yes… but this is one of the key differences of concentrating the excess capital into the smaller group of the shareholders and dispersing that excess capital to the employees.

The employees are more likely to spend that money immediately into the economy on a nationwide scale.

That cannot be said when all of the money only goes to the shareholders.

I bet trickle down will work in 2050 when they try it yet again.