Kinder Generous Corporations?

        Before the tax bill passed it was reported that a group of CEOs were asked what they would do with the additional money rendered from the tax benefit that corporations would receive. Not surprising most said they would expand their business and increase profits and dividends to shareholders. When asked about workers most seemed to just scratch their heads. Now the entire theory of this tax reform is Ronald Reagan’s trickle-down effect. Give the rich what they want and eventually it will find its way into the pockets of ordinary citizens. Of course this does not does not take into account the primary purpose that corporations exist. We don’t have to go too far back into American history to learn that before corporations were created wildcat entrepreneurs tried establishing colonies in the New World using their own funds. After one devastating disaster after another those rich entrepreneurs like Lord Baltimore and Sir Walter Raleigh simply refused to fund these dangerous enterprises any longer since the burden of cost and loss was upon their individual shoulders. By inventing the corporation these wildcatters were allowed to make their investments and should they produce profits the crown would get a share, i.e. a tax, and if losses were generated their liability was limited to their investment. In essence the birth of the modern-day Corporation. So from its beginnings its purpose was to insulate investor- risk takers and shareholders not to take care of workers. Notwithstanding this analysis some companies have already joined the tax reform bandwagon. Walmart recently announced that it would be increasing wages from a crummy $7 an hour to a still crummy $11 an hour. It cited the relief it was getting in the tax reform bill for its willingness to begin sharing with its employees. Walmart, they say, is the bellwether in low wage employment. Curiously at the same time Walmart announced that it would be closing 63 stores and putting thousands of workers out of jobs. The Ying and the Yang of corporate America. Walmart has not as yet revealed just how great a benefit it will receive from the tax reform bill but one can only guess. Fiat Chrysler says that because of the tax credits involved in the new tax bill it will be moving its pickup factory from Mexico to Michigan as well as awarding $2000 bonuses to each of its 60,000 hourly and salaried employees in the United States. The company said that the action was made possible by the tax bill and that it was “only proper” that employees share in the savings generated by the new law. The US treasury has gotten into the act as well. The other day it released new tax withholding tables and encouraged companies to incorporate them as soon as possible so workers can begin seeing bigger paychecks. Those lower withholding rates should go into effect no later than February 15. Things look pretty rosy right now. We’ll have to see where we are by year end.