Catherwood LibraryILR School

Supporters of the Republican tax plan that is working its way through Congress are arguing that the plan to cut corporate taxes will help businesses invest more, resulting in more jobs and increased competition, which in turn will increase worker’s wages by an extra $4000, according to the Trump administration’s economic analysis. However, few American corporations appear enthused about the tax cuts and few have detailed plans on how to invest the savings - a response that has puzzled the president’s top economic advisor and which has prompted one union, the Communications Workers of America, to pen a letter to the top executives at Verizon, AT&T and six other companies, asking for a pledge to increase annual pay by $4000 for every year that the corporate tax rate remains at the proposed 20 percent. The letter also asked executives to not take advantage of other changes in the tax code which would result in sending American jobs overseas. The letter highlights the doubts shared by labor groups and liberal economists over whether the tax bill will benefit shareholders more than workers; research suggests that corporate tax cuts will result in companies buying back stock or increasing dividends to shareholders. Economists across the political spectrum are also skeptical that the size of the American economy will be bigger a decade from now, due to a stagnant wage growth that has persisted even with low unemployment, and high corporate profits that have not resulted in similarly high levels of business investment. Verizon commented that the company would address the wage issue when contract negotiations begin in 2019, “regardless of the outcome of tax reform legislation,”; AT&T noted in a rare detailed statement that the company will invest an additional $1 billion in the United States if the tax bill passes, citing research that “each $1 billion invested in the telecom sector creates about 7,000 jobs.”