A word of advice on taxes and wages

If you believe that employers will either hire additional workers or raise salaries after receiving the tax windfall that is currently on offer, please understand this: they will not. 

This is not because employers are bad people. By and large, they aren’t any more good or bad than anyone else. It’s simply because that’s not how businesses operate. Unless a company is literally going bankrupt (in which case tax rate changes don’t apply to them, obviously) decisions on either salaries or hiring have nothing whatsoever to do with how much money a company has in the bank. 

Companies hire for one reason only: because they need more workers to support their business. Companies raise salaries for one reason only: because they have to do so in order to attract or retain talent. Note that neither of these reasons involves the amount of cash the company happens to be holding at the time.

When an already profitable corporation (the only kind that has to worry about corporate taxes) receives an infusion of cash, it does one of three things with the money: (1) stash it somewhere against possible future need; (2) return it to the shareholders in the form of dividends; (3) use it to raise share prices through stock buybacks. Again, this is not a moral failing on the part of corporate managers. This is what their incentive system drives them to do.

Does this mean that the capitalist system is inherently broken? Not really. It is what it is, and as long as we understand what it is and how it will react to changes, we can design public policy accordingly. It does mean, however, that when you’re deciding whether to support a particular tax bill, you should probably discount any trickle-down benefits that you’re being promised. Unless you make your money investing rather than working, they’re not going to materialize.