We knew, and the banks knew, that they would benefit greatly from the GOP's tax cuts for the rich, but they've apparently benefited even more than they expected to in some cases.
Bloomberg reviewed records from the 23 biggest banks in America and found that their effective tax rates dropped below 20 percent last year and they took home an extra $21 billion.
By year-end, most of the nation’s largest lenders met or exceeded their initial predictions for tax savings. On average, the banks saw their effective tax rates fall below 19 percent from the roughly 28 percent they paid in 2016. And while the breaks set off a gusher of payouts to shareholders, firms cut thousands of jobs and saw their lending growth slow. [...]
While banks vowed to use a portion of their savings to reward employees, help needy communities and support small businesses, the magnitude of their break and how the money was divvied is likely to fuel debate over whether the law was an effective way to stoke the economy. The 23 firms boosted dividends and stock buybacks 23 percent, and they eliminated almost 4,300 jobs. A few have signaled plans to cut thousands more.
Records also show that consumer lending also slowed for these same banks who actually loaned more before the tax cuts were passed.
At best, corporate tax cuts had a muted impact on lending, the banks’ primary contribution to the economy. While the group of banks increased their total loan books 2.3 percent last year, that was slower than 3.6 percent a year earlier.
To be sure, lending is driven by demand from qualifying customers. Rising interest rates discouraged home sales and potentially other activities. Corporate clients also got a tax break, leaving them more money to fund expansion without borrowing.
Rising interest rates may have slowed borrowing, but interest rates are rising, at least in part, because of the GOP's tax cuts. None of this is happening in a vacuum.
As I've said before, the next Democratic presidential nominee will have to make the case that these tax cuts have not fundamentally altered the landscape of the economy, at least not for the better.
Trump and the GOP are going to say raising taxes will kill jobs and reduce investment in 2020, but banks and other corporations are killing jobs anyway and the tax cuts have not led to substantial changes in investment. The tax cuts have to be rolled back or replaced with some other tax on the investment class who've received nearly all of the benefits.