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Joe Nocera

Workers Won't Profit From Corporate Tax Windfall

Companies are preparing to buy back stock and increase dividends. In other words, to reward capital instead of labor.
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Photographer: Ron Antonelli/Bloomberg

Even before the Republican tax bill was signed, companies were lining up to take advantage of one of its key provisions: the new, lower rate designed to lure profits earned abroad back to the U.S. With the corporate tax rate dropping from 35 percent to 21 percent, U.S. companies will get an even sweeter deal if they bring home some of the $2.7 trillion in profits they’ve been sheltering abroad to avoid paying U.S. taxes. Their one-time-only tax rate will be 15.5 percent. 

There’s not much doubt that this tax holiday will transfer billions of dollars back to the U.S. But to what end? Republicans in Congress insist that it will encourage companies to make new investments, hire more workers, boost wages, yadda, yadda.