Taxes

Trump’s Tax Cuts Hand Record Hauls to Big Banks

JM Ashby
Written by JM Ashby

You may have seen the news that stocks soared yesterday evening and this morning because the biggest and wealthiest banks in the world are reporting record earnings and savings, but while the likes of J.P. Morgan just had the best year of any bank ever, it's not necessarily a reflection of health in the greater economy for average Americans.

At least one reason why the biggest banks are reporting record hauls is the GOP's tax cuts for the rich and wealthy shareholders they passed in December of 2017. Bloomberg has calculated that the tax cuts have now delivered a windfall of about $32 billion to the banks.

The tax cuts have allowed banks to funnel more money to shareholders while also cutting jobs and lending money to fewer people.

Savings for the top six U.S. banks from President Donald Trump’s signature tax overhaul accelerated last year, now topping $32 billion as the lenders curbed new borrowing, pared jobs and ramped up payouts to shareholders.

JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc., Wells Fargo & Co., Goldman Sachs Group Inc. and Morgan Stanley posted earnings this week showing they saved $18 billion in 2019, more than the prior year, as their average effective tax rate fell to 18% from 20%. Bloomberg News calculated the haul by comparing the lower tax rates to what they paid before the law took effect, which averaged 30%. [...]

Trump, who’s also pushed to ease financial regulation, indicated Wednesday he’s aware that his efforts have helped banks boost profits. At a gathering of corporate leaders to celebrate his trade deal with China, he greeted a senior JPMorgan executive by suggesting the bank thank him.

“They just announced earnings and they were incredible,” the president said of the nation’s largest bank. “I made a lot of bankers look very good. But you’re doing a great job.”

Indeed, Trump has "made a lot of bankers look very good."

Everyone else? Not so much. Executives from the likes of Ford and General Motors have eaten a lot of shit as Trump's tariffs cost their companies billions.

Running as a fake populist in 2020 will not be as easy for Trump as running as a fake populist in 2016 was because of his tax cuts and I believe that's one reason why he wants to keep his trade war with China in his back pocket.

Trump does not talk about his tax cuts very often now, but he can still point toward his trade war and claim he's fighting for average Americans (and have it taken seriously by the press) even if the war has hurt far more people than it has helped.

  • Draxiar

    Agent Orange may not talk about his tax cuts but every single Democrat certainly should…especially the ones running for an election.

  • muselet

    Banking is a necessary but—as currently constituted, at least—ultimately unproductive sector of the economy.

    I don’t do business with any of the big banks because I don’t want to associate with companies that have no compunction about actively harming their customers and (now-former) employees in favor of their shareholders.

    I wonder if Donald Trump likes the result of his tax deform plan because he thinks banks will start lending him money again (spoilers: they won’t).

    –alopecia