This was the tune President Trump sang when the Republicans cut corporate taxes in 2017, promising wages would soar, investment would surge, and the cuts would pay for themselves. The Congressional Research Service (CRS) has now taken a thorough look at the results and reports that the cuts haven't affected wages, haven’t caused a surge in investment, and haven’t come close to paying for themselves. Nor have they provided the average worker a tax cut.
What the tax cuts did do, according to the CRS, is contribute to a record-breaking surge in corporate stock buybacks. In other words, corporations used the windfall to buy up their own stock. Consequently, the prediction that there would be an increase in tax revenue from increased economic activity also proved false—overall government revenue fell.
The CRS pointed out that this was a case of history repeating itself. In 2004, in order to promote investment and wage growth, corporations were given a one-time tax holiday allowing them to repatriate earnings from abroad at a lower rate. Neither the investment nor the wage growth resulted.
Summarizing the Trump tax cuts, a Los Angeles Times article declared, "Wealthy Americans reaped the benefits of lower taxes and higher dividends. The cuts had a negligible effect on U.S. economic growth while depriving the government of revenue."
It's a good article, written by the Pulitzer Prize-winning journalist Michael Hiltzik. I don't know if Alberta's finance minister reads the LA Times, but I would highly recommend this article to him, or indeed the full CRS report, before he proceeds with Alberta's corporate tax cuts. Unless, of course, the object is to achieve what the Trump cuts did, simply put more money into the hands of the rich.
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