Thanks to Republican tax bill, big banks claim record profits
The U.S. banking industry is rolling in cash this quarter largely due in part to the GOP-Trump tax bill passed last December.
Data from the Federal Deposit Insurance Corporation (FDIC) released Tuesday show big banks earned $62 billion in the third quarter of 2018 — the highest return on assets in the three decades-long history of the FDIC’s Quarterly Banking Profile — up nearly 30 percent from the same period the year before. About half of those profits can be attributed to the tax bill, which dramatically lowered the effective tax rate for banks.
Thanks to the GOP tax bill, banks pay effective tax rates lower than the new 21 percent rate for corporations. Shortly after the bill’s passage, JP Morgan Chase announced it expected to reduce their tax rate to just 19 percent, a cut of nearly one third of what they paid the year before. Similarly, PNC Financial announced it will likely pay a tax rate of just 17 percent.
“The good news is that tax reform has produced both current and future benefits for our shareholders,” PNC’s president and chief executive, Bill Demchak, told analysts at the time.
But that kind of statement is a giant self-own, plainly revealing that the only people who benefit from the GOP tax bill and the record-high profits it produces are shareholders.
While President Trump and congressional Republicans marketed the GOP tax bill as a gigantic boon for the middle class — even promising the average family would receive a 4,000 pay raise. Now, 11 months after the the bill was signed into law, there hasn’t been much change.
Hourly wages have basically remained stagnant while corporate profits have skyrocketed.
The last real wage numbers before November came this morning. The final verdict on the Trump economy is in: Corrupt. pic.twitter.com/79muzJD16p
— CAP Action (@CAPAction) October 11, 2018
Much of a show was made of the bonuses that corporations doled out after the bill was passed, but those wound up to be nothing but a publicity stunt. The majority of companies publicized the bonuses just as they used their tax savings to award stock buybacks to shareholders while offsetting the cost of closing stores where thousands of people worked.
The total of those announced bonuses totaled roughly $981 million, while the cost of the tax bill was actually $1.4 trillion, meaning workers got only 0.9 percent, according to analysis by ThinkProgress.