In April 2017, President Trump submitted the broad outline of what would later become the Tax Cuts and Jobs Act in a one-page document that proposed slashing the corporate tax rate in half. At the time of the proposal’s release, executives from Ford Motor Company stated: “We believe this is a positive step toward much-needed U.S. tax reform ... nothing has greater potential to spur American job and economic growth.”
Two years later in May 2019, those same executives have announced they’re now cutting 7,000 jobs, shrinking its workforce by a total of 10 percent. In the U.S. alone, 800 jobs will be eliminated by August. These layoffs are in addition to the 1,500 U.S. employees to whom Ford offered buyouts last year. Now, analysts say that to meet the company’s publicly stated “Smart Redesign” goals, Ford might have to eliminate up to 23,000 jobs in the coming years. The company declared the job eliminations a necessary cost-cutting measure to save around $600 million annually. Meanwhile, in 2018 alone, Ford got a $750 million tax windfall.
So much for all that great, job-creating potential, right? Well, it’s not quite so simple as the tax bill being a dud.
The reality is that the Trump tax cuts made billions of dollars available to the biggest American companies that could indeed have been invested right back into their own companies to spur new growth and keep good jobs on hand. It’s not that Ford, along with the countless other major companies that are axing jobs left and right at the moment, lacks the potential to create new jobs and raise wages — it’s that it lacks the desire. Ford made a decision that the owners of the company would be better off just keeping the money, rather than investing it or hiring people.
However awful, this isn’t a surprise to anyone familiar with corporate decision-making. Corporations use their profits to pay their federal taxes, and if that tax bill is reduced, they are simply going to keep more of their profits for their executives and shareholders rather than let the wealth trickle down below. If management believes that the company will have higher profits without those thousands of workers, no amount of lowering the tax rate, even to zero, will change that — those jobs were always going to be lost, because they just didn’t add to the bottom line. It’s as pessimistic as it is, unfortunately, true: corporations are rarely accused of utilizing the kindest and most human-centered approach to doing business.
There are, of course, multiple factors that contribute to such large-scale job losses. The point isn’t to draw a simple line from A to B and make the case that corporate tax cuts led to these eliminations, though they almost undoubtedly contributed to some through things like incentives for offshoring. The point is that the entire central, motivating rationale behind the GOP tax cuts — that slashing corporate taxes was the only way to spur growth and create jobs — was fundamentally wrong.
That rationale is wrong because it assumes that corporations, and the expensive C-suite executives who run them, are interested in anything beyond their own profits. Some of those executives do value their workers and reinvesting in their nation, and we at the Patriotic Millionaires are among them. But we must acknowledge the ugly truth that if more corporate executives operated with more than just their paychecks in mind, we wouldn’t see stories where companies use all their lobbying might to fight for millions of dollars in tax savings while lifelong workers are rewarded with pink slips.24 comments on this story
If all the money corporations saved truly did go back into keeping Americans employed and our economy humming along, thousands of Ford employees would still have their jobs — but it didn’t, and we all should’ve seen it coming. The Tax Cuts and Jobs Act bill was never going to help the American worker — trickle-down simply doesn’t work. It’s been a tragic fact from the start that slashing corporate taxes was only going to subsidize the greed of rich executives, and leave millions of Americans in the dust. But perhaps that was the point.