On the heels of President Donald Trump’s tax plan, Pepsi said that it would be passing on tax savings to their employees by giving them a $1,000 bonus. Well, as expected, they aren’t really, and Pepsi seems more interested in cutting some of their corporate employees. However, bonuses will go to the employees who make the Pepsi’s snacks and drinks, as well as delivery drivers.
Like other corporations, Pepsi cited the new tax framework introduced by Trump and his administration for the bonuses. It’s worth noting that Pepsi does not have some rubric on how many employees will be receiving a bonus. The new tax plan also enabled Pepsi to increase annual dividends by 15 percent, as well as bolster their buyback program from $12 billion to $15 billion.
Despite the incentives introduced by the tax plans, Pepsi has seen a downward trajectory of their sales in North America, including peripheral corporations like Frito-Lay and Quaker.
Here’s What Happens With a Tax Cut
Corporate buyback of stocks has surged under the Trump era, more than double the amount in the same period last year. The corporate tax rate was slashed from 35 percent to 21 percent, in the hopes that it will encourage American corporations and businesses from holding their money in foreign banks, and instead focus on revitalizing the workforce.
In reality, these tax cuts have allowed corporations to buy back their own stocks. Corporations do this to prop up their share prices artificially. The funds allocated for buybacks does not translate to new equipment, research, public safety, or employee support. Buybacks do not increase productivity nor does it contribute to the growth of the economy.
Tax cuts are like steroids: they make shareholders, businesses, and corporations feel better about themselves, when nothing profound is really happening — except pad the pockets of the super-rich, of course.
Featured image via screen capture