Foon Rhee

President Trump shouldn’t crow too loud about tax cuts yet

Apple, which just opened a new headquarters in Cupertino, announced it is partly using tax savings to spend $350 billion in the next five years.
Apple, which just opened a new headquarters in Cupertino, announced it is partly using tax savings to spend $350 billion in the next five years. The New York Times

The almost daily announcements sound impressive and generous.

 
Opinion

American Airlines, AT&T, Bank of America and Comcast are giving their workers $1,000 bonuses. Since President Donald Trump signed the sweeping tax cuts that slashed what corporations pay, dozens of companies have announced payments to employees. Last week, Fiat Chrysler said it will hand out $2,000 bonuses and add 2,500 jobs in Michigan.

And Wednesday, Apple said that it would hire 20,000 more workers, build another campus and spend $350 billion in the next five years, including $75 million in profits it has been stashing offshore.

Trump and Republican leaders in Congress are boasting that their tax bill is already paying off big time for American workers.

“I promised that my policies would allow companies like Apple to bring massive amounts of money back to the United States,” Trump tweeted Wednesday. “Great to see Apple follow through as a result of TAX CUTS. Huge win for American workers and the USA!”

He talked up the tax cuts again Thursday in a rally in Pennsylvania that previewed the GOP campaign leading up to the November election, and said he had called Apple CEO Tim Cook to thank him. “They are going to build plants, they are going to build a big campus, they’re really going to town,” the president said.

The tax reform permanently reduces the corporate tax rate from 35 percent to 21 percent. Also, money that companies bring back from overseas this year will be taxed at 15.5 percent.

I have criticized the tax cuts as mostly a giveaway to the rich and to corporations. I’m more than willing to admit if I’m wrong. But here’s the thing: All of these bonuses could be fool’s gold.

They will certainly help workers in the short term. For many families, they are more than “crumbs,” as top House Democrat Nancy Pelosi of San Francisco described them.

But what about the long haul? Will employees get another round of bonuses next year, or is this a one-time thing?

Analysts point out that it would be much better for workers if they received permanent raises. They also note that what companies are handing out in bonuses is small potatoes compared to the windfall for corporations – about $1 trillion of the $1.5 trillion in tax savings over 10 years. Some say the bonuses are more a public relations ploy – and even a way to get on Trump’s good side.

I’ll be far more impressed if lots of companies hire many more workers and pay them more and all of this progress lasts.

But I fear the bottom line could be more like Walmart. It announced last week it is giving bonuses of as much as $1,000 and raising its starting pay to $11 an hour. But the very same day, the retail giant also said it is closing 63 Sam’s Club stores.

Funny, Trump didn’t take to Twitter to brag about that.

Foon Rhee: 916-321-1913, @foonrhee

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