The Republican tax law is working great for big Wall Street banks, but leaving many Americans behind.
Donald Trump promised the 2017 Republican tax law would create jobs and support the middle class. Instead, six big banks have pocketed an additional $32 billion in savings — while cutting more than 1,000 jobs — over the past couple of years as a result of that law, Bloomberg reported Thursday.
Bloomberg calculated the additional savings from the GOP tax law by looking at the tax rates banks paid before the 2017 law (30%) to the rates the banks paid after the law went into effect (between 18% and 20%). The banks saw an additional $14 billion in profits in 2018, then another $18 billion in additional profits in 2019.
In the meantime, the banks also cut their workforce by a combined 1,200 jobs by the end of 2019.
The six banks include JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs, and Morgan Stanley.
Much of the savings come on the backs of consumers through credit card debt, according to Ken Leon, director of equity research at CFRA Research. The consumer credit card market is "still a leading growth driver for the consumer bank," he told the Washington Post.
"Even though consumers are confident, people are still carrying significant debt," Ted Rossman, an analyst for CreditCards.com, told the Post. "From a bank's perspective, that is a big moneymaker. From a consumer's perspective, I would encourage everyone to pay that down."
While big banks are soaking up excess savings and slashing jobs, many families throughout America have not seen the same types of benefits from the 2017 law.
Two years after the tax bill sailed through Congress without a single vote from Democrats, NPR declared that the law has "failed to deliver on GOP promises." The outlet reported that more than 60% of the tax savings went to the wealthiest 20% of Americans, leaving 80% of Americans behind.
Rather than the "rocket fuel" Trump promised for the economy, NPR reported that the U.S. economy grew at 2.9% in 2019 in the wake of the tax bill's passage — the same growth as in 2015, during President Obama's penultimate year in office.
Further, rather than "pay[ing] for itself," as Treasury Secretary Steve Mnuchin once claimed, NPR reported that the tax law is responsible for massive increases in the federal deficit. Last year, the deficit topped $1 trillion dollars — exactly as experts had predicted it would as a result of the GOP bill.
Big banks and other major companies have tried to play off the tax law's benefits as a boon to the American worker regardless. In the immediate aftermath of the bill becoming law, many private companies issued press releases touting bonuses for their workers. However, the total bonuses workers received in 2018, compared to the year before, was just one cent more, according to the Economic Policy Institute.
In 2019, the Wall Street Journal reported that additional bonuses for workers "appear to largely have been a one-time windfall," with companies no longer handing out similar bonuses in the second year the law was in effect.
Published with permission of The American Independent Foundation.