Feb 27, 2018

Companies spending Trump tax cuts on themselves

Man walks by the New York Stock Exchange. Photo: Spencer Platt / Getty Images

Trump has touted that the recent tax code overhaul would prompt companies to use extra funds to hike up their employees’ paychecks. While some companies have announced plans like this, others are using much of the extra cash to invest in their own companies by buying back shares, NYT’s Matt Phillips reports.

Why it matters: That’s an investment back into the companies which will likely enhance their stock prices, but it is “most likely to worsen economic inequality because the benefits of stocks purchases flow disproportionately to the richest Americans,” Phillips writes. The bottom line is what companies do with their extra wiggle room will determine how successful the tax code overhaul is for Republicans.

  • The White House knows buybacks are more popular than wage investments now. “Right now we’re going to have an adjustment where you see probably more dividends and share buybacks than wage increases,” the head of White House’s Council of Economic Advisers, Keven Hassett said last week.

But, but, but:

  • Buybacks are a boon for the stock market. The fact that buybacks were coming down the pipeline helped the stock market recover from some its losses earlier this month, Phillips says.
  • The causality for the buybacks isn’t necessarily about the tax code overhaul. Some economists believe the recent uptick in buybacks is due to a decline in capital investments.

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Pro-Trump warrior takes the helm of U.S. intelligence

Richard Grenell in Berlin. Photo: Sean Gallup/Getty Images

By picking Ambassador Richard Grenell to be acting director of national intelligence, President Trump has slotted a pro-Trump warrior into the ultimate apolitical role.

What they're saying: James Clapper, the longest-serving DNI (2010-2017), tells Axios it's "very worrisome installing a partisan with no real intelligence experience in this position."

Coronavirus kills 2 Diamond Princess passengers as Israel confirms first case

Data: The Center for Systems Science and Engineering at Johns Hopkins, the CDC, and China's Health Ministry. U.S. numbers include Americans extracted from Princess Cruise ship.

Two elderly Diamond Princess passengers have been killed by the novel coronavirus — the first deaths confirmed among the more than 600 infected aboard the cruise ship — as Israel confirmed its first case among evacuees from the ship.

The big picture: COVID-19 has now killed more than 2,200 people and infected over 76,000 others, mostly in mainland China, where the National Health Commission announced 118 new deaths since Thursday.

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California's "woman quota" law seems to be working

Illustration: Eniola Odetunde/Axios

When California passed its boardroom law requiring public companies based there to have at least one female director, there were concerns it would spark a gold rush for the same handful of well-known women — but that hasn’t happened.

Why it matters: Of the 138 women who joined all-male California boards last year, 62% are serving on their first company board, per a study by accounting firm KPMG. That means a majority of companies aren't contributing to so-called overboarding in corporate America.