This story was originally published by The Center for Public Integrity, a nonprofit, nonpartisan investigative news organization in Washington, D.C.SIDNEY, Ohio — Toward the end of last summer, managers at global giant Emerson Electric Co. called an employee meeting at its air conditioning and refrigeration factory in this county seat of 21,000 people west of Dayton.
The Tax Cuts and Jobs Act congressional Republicans had passed, and President Donald Trump had signed in late 2017, Emerson executives told the Sidney plant employees.
With the announcement, Emerson joined hundreds of companies — as many as 750 by one count — that issued similar statements to show they were sharing the wealth of a $150 billion cash windfall firms were estimated to receive in the first year from the then newly enacted tax law.
Back in 2017, as the tax bill moved on the Hill, lawmakers claimed the cut they proposed in the corporate tax rate to 21 percent from 35 percent would trickle down to workers in the form of higher wages and bonuses.
Emerson’s action, and similar bonuses and wage increases, trumpeted by hundreds of companies like AT&T Corp. and Walmart Corp., provided proof the Republicans had their economic theory right.
For many of those same companies, a tiny fraction of the total number of U.S. businesses, executives haven’t yet announced another round of bonuses or wage increases with the same fanfare — even though the tax law continues to mean billions for their bottom lines.
Americans for Tax Reform, a conservative anti-tax group run by Grover Norquist which boasted last year of ongoing “good news” in bonuses and benefit increases, hasn’t reported any announcement for three months.
Most American businesses that announced bonuses and wage increases seem to be more like Emerson, which has “no plans to make an additional 401(k) contribution this year,” a company spokeswoman said.
Companies pay for ongoing stock buybacks primarily through after-tax profits that got a boost with the corporate tax cuts.
A couple months earlier, Trump, and then-House Speaker Rep. Paul Ryan, R-Wis., boasted the tax law would likely give typical households a $4,000 a year wage hike, with the White House reporting wages could even increase by more than $9,000 a year.
Manufacturing executives were particularly vocal, arguing that the lower corporate tax rate would not only increase wages, but also allow their companies to be more competitive globally and bring back jobs.
David Farr, chief executive of Emerson Electric and former chairman of the powerful National Association of Manufacturers, helped lead the tax-cut effort and pushed for a lower 15 percent corporate tax rate.
Emerson’s tax rate fell to 17 percent in 2018, according to its annual filing with the Securities and Exchange Commission, and company executives estimate a rate of 24 to 25 percent this year, boosting profits.
Farr told investors in an August presentation that the tax law allowed the company to increase wages and improve the company’s health plan, parental leave and paid time off.
But Emerson reported it received $189 million in tax savings, of which it spent $24 million, less than 13 percent on its 401(k) bonus contributions — a payment that brought financial benefits to the company as well.
The conservative Americans for Tax Reform group kept a running tally of corporate announcements through last October and listed as many as 750 examples of “pay raises, charitable donations, special bonuses, 401(k) match hikes, business expansions, benefit increases, and utility rate reductions attributed to the Tax Cuts and Jobs Act.”
Companies spent $929 billion on stock buybacks compared to $7.1 billion on wage increases and bonuses, according to Americans for Tax Fairness, a left-leaning nonprofit group that tracked announcements by Fortune 1000 companies.
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