I unfortunately do not have time to put a lot into this post, but I feel that a lot of folks here would be interested in this front page story from the Sunday Globe.
I often read and hear from conservative sources how all we need to do is lower taxes on the “job creators” and the economy will prosper for all. So since there are quite a few companies prospering right now, how is that going?
Since the early 1980s, the nation’s top publicly traded companies have gone from having 70 percent of their profits available to reinvest in their business to just 2 percent in 2014.
The rest is being plowed into dividends and stock buybacks that mostly enrich a select group of investors and executives, according to William Lazonick, a University of Massachusetts Lowell professor whose research was published last fall by Harvard Business Review.
So, does this mean that we’re getting some “trickle down”?
Buybacks are booming because US companies have earned record profits and are hoarding a vast amount of cash. The companies use buybacks to share some of that wealth with their executives and shareholders. Many CEOs were given record compensation, and shareholders may have benefited from higher stock prices.
But most stock is owned by the nation’s wealthiest 10 percent; about half of Americans don’t own a single share, directly or indirectly. And buybacks can squeeze the economy in another way: Dollars not reinvested by a company in expanding their business can also mean fewer jobs in construction and other fields.
I see. Not so much. But they must be creating some new jobs, right?
The Boxborough workers learned that at the same time they were being laid off the company was continuing to spend billions of dollars to buy back its own stock, a move designed to reduce the number of shares on the open market and perhaps boost its relatively stagnant share price.
So if we just provide more tax cuts to these corporations, how exactly does this translate to a better situation for those not in the top 10%?
Reading of the entire article is recommended.