When Republicans pass a firesale of tax cuts for the rich and corporations, their profits will trickle down into the labor market and then directly into the Treasury's coffers, right?
No. That's what Republicans tell us, but it has never worked out that way before and there's no reason to think it will this time.
In fact, major Wall Street brokers are already investing in stocks in anticipation that nothing will be trickling down to the little people.
Fund managers from Columbia Threadneedle Investments, Hodges Capital, and SSI Investment Management are among those that are adding to or holding on to their shares of those of companies such as Texas Instruments Inc, Microsoft Co and Southwest Airlines Co in part because they expect to see more share buybacks or special dividends if a tax reform passes in some form. [...]
Fund managers say that while it is far too soon to tell whether the tax bill will pass, the prospect of increased buybacks is worth taking a bet on companies that would benefit the most from the plan.
“If you have two companies that you are looking at and one would get a bigger boost from bringing back its cash from overseas, that provides an extra level of return,” said Peter Santoro, a portfolio manager of the $11 billion Columbia Dividend Income fund.
The great Wall Street Casino is already firing up to cash in on stock buy-backs and dividend payments that will be made possible by $5 trillion in tax cuts. They also anticipate companies will repatriate their profits from overseas because the House Republican tax bill eliminates taxes on overseas profits.
None of that money is going to be passed down in the form of higher wages for labor. On the contrary, Wall Street investors are also betting big on automation, anticipating that some businesses will use their tax cuts to automate production with robots.