After Voting for Tax Law, Rubio Slams It for Helping Corporations Over Workers
(Bloomberg) -- Republican Senator Marco Rubio broke with his party by blasting last year’s tax overhaul for benefiting corporations rather than workers.
“When corporation uses profits for stock buy back it’s deciding that returning capital to shareholders is better for business than investing in their products or workers,” Rubio said in a tweet Thursday. “Tax code encourages this. No surprise we have work life that is unstable & low paying.”
The comment by Florida’s Rubio, who voted for the tax law, echoes the message Democrats have used to criticize his party’s signature legislative achievement under President Donald Trump. They’ve said the law, which slashes the corporate rate to 21 percent from 35 percent, is a handout to corporations, which are using their savings to just repurchase more stock.
Key defenders of the Trump tax plan have sought to downplay the benefit for corporations. Chairman of the White House Council of Economic Advisers Kevin Hassett said in an op-ed in April that those who described the tax cuts as helping corporations at the expense of the working class were “wrong.”
Treasury Secretary Steven Mnuchin has said that buybacks help recycle capital through the economy, which ultimately is a good thing for all Americans.
Before the tax bill passed, Hassett said he expected reducing corporate taxes would spark “an immediate jump in wage growth.” Real hourly wages for all employees increased 0.8 percent in November from the prior year, according to data from the Bureau of Labor Statistics.
Rubio is proposing to cut any tax advantages tied to stock buybacks. In a proposal laid out in an op-ed in the Atlantic, he said buybacks should be taxed at the same rate as dividends. That would encourage companies to use cash to invest in projects, such as new facilities, where those costs could be deducted, he said.
Aggregate share repurchases, also known as buybacks, increased by almost 50 percent to $384 billion in the first half of 2018, according to research from Goldman Sachs.
Rubio, who ran unsuccessfully for president in 2016, has previously criticized his party for directing too much of the 2017 tax cut to corporations and not enough to families. In the final days of debate in the Senate, Rubio, along with Mike Lee of Utah, pushed to increase the corporate tax rate to pay for a more generous child tax cut. After lawmakers agreed to increase the refundable portion of the credit, Rubio supported the law.
©2018 Bloomberg L.P.