Trump’s 2017 tax law, the Tax Cuts and Jobs Act (TCJA), was touted as a way to reduce the corporate tax rate and help American businesses thrive.
But after Ford ( F ) announced that it is laying off nearly 7,000 workers on Monday, presidential candidate Sen. Bernie Sanders (I-VT) took to Twitter to call the corporate tax cuts “the Trump tax scam.”
Ford got nearly $750 million in tax breaks from the Trump tax scam and paid its CEO $18 million last year.— Bernie Sanders (@BernieSanders) May 20, 2019
Now, Ford is laying off thousands of workers.
The bottom line: Republicans sold the tax scam as a way to create jobs and help workers. They lied. https://t.co/uCoJ5g0PPP
“Ford got nearly $750 million in tax breaks from the Trump tax scam and paid its CEO $18 million last year,” Sanders tweeted. “Now, Ford is laying off thousands of workers. The bottom line: Republicans sold the tax scam as a way to create jobs and help workers. They lied.” (Sanders’ office did not immediately respond to a request for comment.)
‘Nothing has greater potential to spur American job and economic growth’
Trump and other Republicans argued that cutting corporate taxes would lead to a surge of investment that would ultimately benefit workers, as companies bought more stuff, built new facilities, hired more workers and raised pay. Yet the data did not show that kind of surge in hiring or investment .
Many big companies, including Ford , came out in support of the tax reform proposal when Trump and the GOP pushed for the plan in 2017.
“We believe this is a positive step toward much-needed U.S. tax form,” Ford stated in April 2017. “Nothing has greater potential to spur American job and economic growth than lower and more competitive U.S. tax rates.”
Sanders’ tweet is likely referring to the fact that Ford benefited from paying a 21% corporate rate in 2018, the lowest since 1939 , was applied to its profit. )The previous rate had been 35%.) Bloomberg reported that in the first quarter of 2018, Ford saved roughly $208.4 million in taxes.
Ford CEO Jim Hackett also saw a 6% increase in his salary to $17.75 million in 2018. Sanders’ tweet suggested that this high number was related to the lower tax burden.
‘This would provide financial incentive for auto manufacturers’
Despite the benefits of Trump-led tax reform, Ford is set to lay off nearly 7,000 employees, which is about 10% of its global salaried workforce as a means to save the company $600 million a year.
A similar situation arose late last year with General Motors ( GM ), which also received significant corporate tax cuts as a result of Trump’s tax law. The company was forced to lay off almost 15,000 workers, putting the TCJA back under the spotlight as many speculated whether or not it did more harm than good.
The same trend occurred across large companies, according to a November 2018 analysis by the New York Times .
“Many companies also said they would use tax savings to create jobs,” the Times wrote. “But the Just Capital research finds that, since the tax cuts were passed, the 1,000 largest public companies have actually reduced employment, on balance.”
Sanders’ “bottom line” was that Republicans misled the American public about the tax law since they sold it as a way to make more jobs and help workers.
And that charge makes sense politically: A majority of Americans polled believe that the tax cuts did not help them , and Democrats are seeking to capitalize on that for the 2020 elections.
Rick Newman contributed to this post.
Adriana is an associate editor for Yahoo Finance. Follow her on Twitter @adrianambells .