[jpao79]

Fair point! I'm not an economist by training, just a hobby/armchair economist :).

That said, this economist that some HN'er recommended seems to think earnings are strong and much of the buyback is funded by repatriated money if I understand him correctly.

http://blog.yardeni.com/2018/06/buyback-bonanza.html

[ubernostrum]

I'd look at it more as:

The current power structure in the US believes tax cuts are always a good thing, since they put money back in the hands of individuals and companies, who will then allocate that money more efficiently than the government. They argue that with their tax breaks, companies will invest in capital improvements and raises for their workers, and individuals will spend more on consumer goods, indirectly benefiting the average worker by creating more demand for such goods.

The reality is companies that get tax breaks now use that money to do stock buybacks which pay off mostly already-wealthy investors, and the prime direct individual beneficiaries of tax cuts also are already-wealthy people, who then use their double windfall (lower tax rate + buyback profits) to throw even more money into playing the markets.

And somehow the promised benefits, of raises for workers, increased demand for the average worker's labor, etc. never actually materialize.

There are good charts floating around showing how corporate behavior has been pretty much entirely driven by the last few decades of tax policy, primarily the reduction of corporate and top individual rates, and how the changes in behavior have almost universally made economic inequality in the US much much worse than it previously was (see, for example, ballooning executive compensation while average workers' wages are stagnant or even lower than previously when adjusted for inflation, the complete decoupling of wages from productivity, etc. etc.).

[jpao79]

More fair points. And, yes at the individual level, I agree, a higher wage, trickle up approach seems better/fairer than a trickle down approach.

However, at the macro level, the environmentalist in me worries, at the extreme end if wealth really was fully distributed and everyone was living like Richard Branson, Imelda Marcos, etc. with multiple houses in every city (each with a 4 bedroom layout, TVs and wet bar in every room and an SUV in every garage), a yacht, a private jet guzzles premium fuel and a private island, the environmental ramifications would be disastrous.