Major corporations have authorized $200 billion in share buybacks in the two months since the passage of the new tax law while more than 55,000 American workers have been laid off, according to Senate Democrats.

The Tax Cuts and Jobs Act was supposed to spur hiring and investment at companies as the maximum corporate tax rate was slashed from 35 to 21 percent, according to Republican proponents. But Democrats point to evidence that many major corporations are instead using the savings to buy back their own stock.

“These numbers prove that the bulk of the savings from this bill aren’t trickling down into higher wages, but into bigger gains for giant corporations and the wealthy,” said Senate Minority Leader Chuck Schumer, D-N.Y., in a statement.

Cisco Systems, for example, announced plans this month to buy back $25 billion in shares, while Wells Fargo said in January it would buy back 350 million shares, valued at $22.5 billion. According to a survey of Morgan Stanley analysts, only 13 percent of tax cut savings will go towards worker compensation, while 43 percent will go to wealthy shareholders and executives via buybacks and dividends. To date, corporations have spent more than 30 times as much on buybacks alone as on bonuses and pay raises.

“Just a few hours ago, corporations crossed the $200 billion mark in stock buybacks this year,” said Sen. Ron Wyden, D-Ore., the ranking Democrat on the Senate Finance Committee, on the Senate floor Wednesday. “Stock buybacks are windfalls that drive up the value of investment portfolios for CEOs and high-flyers. And they’re coming in at a rate 30 times greater than worker bonuses—30 to one! They’re on pace to double the amount from the first quarter of last year.”

Senator Ron Wyden
Senator Ron Wyden Bloomberg News

He pointed out that the wealthiest 10 percent of earners own 84 percent of all the stock held by Americans. “So when it comes to these buybacks, a huge majority of families are on the outside looking in,” said Wyden. “Moms and dads balancing the rent, the grocery bill, the cost of gas and electricity, they don’t get much of anything out of a corporate handout that gets swallowed up by windfalls for big-time investors.”

Republicans counter that they are hearing from constituents that they are using the tax cuts to increase hiring and investment in their businesses.

“I also got to spend time with local businesses in Wisconsin last week, learning about how the tax reform law is making them better and making them much more competitive. It’s really something,” said House Speaker Paul Ryan, R-Wis., during a press conference Tuesday. “These small businesses told me that tax reform is enabling them to increase capital investments in their people, in their equipment, in their training. I’ve talked to many business leaders—small businesses—who are now confident they can go take a risk and expand employees, expand operations, giving bonuses, giving raises, adding to the benefits. This is what area are seeing all over the country. Wages for hardworking Americans are increasing and paychecks are getting bigger. And this is all thanks to tax reform, and people are actually noticing it.”

Corporation

Share Buyback Amount Announced in 2018 (Millions)

Date

Cisco

$25,000

14-Feb

Wells Fargo*

$22,572

23-Jan

PepsiCo

$15,000

13-Feb

Oracle

$12,000

1-Feb

AbbVie

$10,000

15-Feb

Amgen

$10,000

1-Feb

Alphabet (Google)

$8,590

1-Feb

Booking

$8,000

27-Feb

Visa

$7,500

1-Feb

Applied Materials

$6,000

14-Feb

Mondel?z International

$6,000

31-Jan

eBay

$6,000

1-Feb

Celgene

$5,000

14-Feb

Lowe’s

$5,000

26-Jan

CSX

$3,500

12-Feb

Phillips 66

$3,300

14-Feb

TJX

$3,000

28-Feb

Constellation Brands

$3,000

5-Jan

Fifth Third Bancorp*

$2,844

27-Feb

Valero

$2,500

23-Jan

Eastman Chemical

$2,000

6-Feb

Juniper Networks

$2,000

30-Jan

SiriusXM

$2,000

23-Jan

Baxter

$1,500

20-Feb

IQVIA

$1,500

14-Feb

Teradyne

$1,500

24-Jan

Leidos*

$1,304

22-Feb

Cincinnati Financial*

$1,163

26-Jan

Cardinal Health

$1,000

8-Feb

O’Reilly Automotive

$1,000

7-Feb

Skyworks

$1,000

5-Feb

Altria

$1,000

1-Feb

Rockwell Automation

$1,000

25-Jan

Buybacks <$1 Billion

$26,239


TOTAL Corporate Buybacks Authorized in 2018

$209 Billion


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