The Republican tax reform package that was supposed to raise wages and spur hiring has instead funded a record stock buyback and dividend spree, benefiting investors and company executives over workers.
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"More than 70 percent of this [tax cut] will be returned to workers," said White House Press Secretary Sarah Huckabee Sanders at a January press conference after the bill came into effect.
However, companies have instead used the extra cash to spend billions of dollars buying back their own stock, boosting the value of shares held by investors. Buybacks reduce the number of shares on the market, immediately increasing the value of the shares that investors already hold.
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Compounding the issue is a recent study by the Office of SEC Commissioner Robert Jackson that found that a stock buyback announcement often leads to a short-term stock price pop, which corporate insiders use to cash out their shares.
