Harley-Davidson Shareholders Living High on the Hog, Thanks to Trump’s Tax CutsMillions in tax savings are failing to trickle down to the motorcycle manufacturer's workers.
This wasn’t what Harley-Davidson’s workers were promised. When Donald Trump met with company executives and union representatives at the White House in February of last year, the president vowed that better days were ahead for the country’s most recognizable motorcycle manufacturer. But less than a year after the president signed his tax cuts into law, hundreds of employees stand to lose their jobs, while shareholders have reaped millions in profit.
As Emily Stewart writes in Vox, “It’s a pattern that has played out over and over again” during Trump’s presidency: Major corporations are pocketing their tax savings rather than reinvesting in their personnel. “Corporate stock buybacks hit a record $178 billion in the first three months of 2018,” Stewart notes. “Average hourly earnings are up 67 cents over the past year.”
What, you may be wondering, is a corporate stock buyback? Effectively it’s a means by which corporations inflate share prices through the purchase of their own stock.
“Buybacks are the corporate equivalent of steroids,” writes economist Robert Reich. “They make shareholders feel better than they would otherwise, but nothing really changes. Money spent on buybacks isn’t reinvested in new equipment, research or factories. Buybacks don’t add jobs or raise wages. They don’t increase productivity. They don’t grow the American economy.”
Which brings us back to Harley-Davidson. In January, four months after Speaker of the House Paul Ryan promised that tax cuts would put “American companies like Harley-Davidson on a much better footing to compete in the global economy and keep jobs in America,” the company announced it would be closing its Kansas City, Mo., factory and opening another in York, Pa. The move is expected to eliminate as many as 350 jobs.
At the same time, Harley-Davidson plans to begin production in Bangkok later this year. Though executives insist they’re simply growing the business internationally, as domestic motorcycle sales have dipped in recent years, union leaders maintain the company is maximizing profits at workers’ expense.
Harley-Davidson, which makes between $800 million and $1 billion annually, has seen its tax rate drop approximately 10 percentage points since the passage of the Tax Cuts and Jobs Act; its buyback plan enables the repurchase of 15 million shares worth $696 million. The corporation banned media from attending its shareholders meeting earlier this month.
In December, Trump promised the myriad critics of his tax bill that “the results will speak for themselves.” His words have proved all too true.Wait, before you go…
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