Some economists and corporate executives are already warning that simply lowering tax bills won’t necessarily cause companies to hire more people and pay them better. Instead, they could just wind up returning the extra cash to shareholders.
That could leave President Donald Trump and congressional Republicans celebrating a short-term legislative win that hurts them in the long run, with bigger deficits and little to show for it. And an already deeply unpopular bill — that includes immediate hikes on some individual taxpayers — could become a serious political headache in 2020 and beyond.
“Frankly, I think they are bonkers,” David Mendels, former chief executive officer of software firm Brightcove, said of the GOP banking on a lower corporate rate to generate bigger worker paychecks. “It really doesn’t work that way. No CEO sits there and says, ‘When my tax rate goes down, I’m going to hire more people and pay them more.’”