Just as President Trump hits the road to promote his plan for a massive tax cut for corporations, a new report from the non-partisan Committee for a Responsible Federal Budget has found that his plan to reduce the corporate tax rate from 35% to 20% will result in a revenue loss of $3tn to $7tn for the federal government over a decade and are unlikely to create the promised jobs.
Trump and Speaker of the House Paul Ryan have been pushing hard for the plan. The president travels to Missouri on Wednesday to pitch the plan and Ryan has taken to the road to venues including Boeing’s headquarters, where Ryan pledged to make the cuts by the end of the year.
But the new report by the Washington Think-tank revealed that the cuts were unnecessary as well as exorbitantly costly. The study looked at 92 publicly-traded corporations that reported consistent profitability between 2008 and 2015, and found that they already benefitted from low effective tax rates, paying less than 20% of that net income to the federal government in tax, The Guardian reports.
According to the paper, the report follows on from another by the Institute on Tax and Economic Policy, which studied 258 consistently profitable Fortune 500 companies and found that their effective tax rate was 21.2%. In at least one year, 100 paid no tax at all. From 2008 until 2015, 30 companies paid an effective rate of 6.9%, and eight paid almost nothing.
And —get this— the studies suggest that the tax rate is not tied to job creation. While researchers at the Institute for Policy Studies didn’t study the fate of tax savings on a dollar-for-dollar basis, “we realized that these companies had huge sums of money that were going into stock buybacks,” says Sarah Anderson, director of the Global Economy Project at the institute.
The report also discovered that companies with lower-than-average tax rates rewarded their CEOs with higher than average paychecks and raises. The average CEO of these 92 firms saw his or her pay rise 18% between 2008 and 2016, while the average employee got a 4% wage hike between the same period.
Bottom line, the better they did at cutting jobs, the higher the CEO’s earning power, the Institute for Policy Studies calculated. The 48 CEOs who eliminated the most jobs earned an average of $14.9m, 14% more than the average CEO.