The unpopular Republican tax bill was supposed to open the floodgates of job creation and investment in workers, according to the overzealous spin by folks like Congresswoman Mimi Walters (R-Irvine) and Congressman Steve Knight (R-Palmdale). Democrats, on the other hand, warned that workers would be left out to dry as wealthy corporations showered Wall Street investors with stock buybacks.
Thus far, economists are completely underwhelmed about the tax bill.
“Remarkably unremarkable” is how Ed Yardeni, president of investment advisory Yardeni Research, described some of the spending growth at the beginning of 2018 to CNN.
“Investment has been okay, nothing spectacular,” added Alan Auerbach, director of Berkeley’s Robert D. Burch Center for Tax Policy and Public Finance.
These decidedly uninspired comments are a far cry from what Walters and Knight promised.
Walters boasted the tax bill would “generate significant economic growth,” and she was confident that “the American economy will flourish.”
Not so, says economist Diane Swonk. “So far, we have seen few signs that the tax cuts are stimulating investment,” she told NPR.
One thing many Californians can count on: higher taxes.
In Walters’ Orange County, homeowners may see a tax hike of up to $4,500 this year. For Los Angeles-area homeowners, a new 30-year mortgage could cost up to $76,000 more, thanks to new provisions supported by Knight.
Next year, roughly one million Californians will be forced to pay $12 billion more in taxes because of changes in the tax bill championed by Knight and Walters.
That’s a far cry from when Knight promised that American workers would “see more money in their paychecks every month for them and their families to enjoy.” In fact, surveys reveal that most workers don’t notice a change in their paychecks.
Republicans financed the tax bill with more than a trillion dollars of debt, yet economic growth is “nothing spectacular” and workers aren’t noticing any changes (except for higher taxes for some). Where is all the borrowed money going?
“The tax law started a huge party on Wall Street,” writes CNN. “Almost immediately, Corporate America returned a big chunk of its windfall to shareholders in the form of fatter dividends and bigger share buybacks.”
In fact, stock buybacks may top $1 trillion by the end of the year. These gimmicks raise stock prices and enrich Wall Street investors (more than 80 percent of stocks are owned by the wealthiest 10 percent of Americans).
Further, American debt is also enriching foreign investors. According to one study, foreign investors are set to see $47 billion in economic gains in 2018, more that the combined benefit of 60 percent of Americans.
Republicans like Walters and Knight are taking care of Wall Street donors, but they’re ignoring the needs of Californians with a dud of a tax bill.