In Schumer’s estimation, those with plenty of cash on hand will spend less of their tax windfall on bonuses and wages than on shareholder dividends and stock buybacks — which ultimately show up in corporate hierarchy bonuses. Among the major announcers of buybacks: MasterCard, Bank of America, Pfizer and Wells Fargo.
With so much cash available, “it strains credulity that companies would use tax cuts for job growth and raised wages,” said Matthew Gardner, senior fellow at the Washington-based Institute on Taxation and Economic Policy.
Companies such as WalMart are paying higher wages because of low unemployment and competition for lower-wage employees, he said.
“Companies are going to try hard to emphasize spending tax cuts on workers’ pay,” Gardner said.
“They have every incentive to do so because they have a huge PR problem,” he said. “It’s totally understandable. But if you crunch the numbers, the wage effect is a small part of windfall these companies are getting.” Read more