Much Better than Tariffs: More Effective Ways to Help the Struggling Classes
Trump claims the tariffs will bring back manufacturing to the US. They will provide fair paying jobs to the working class so they can afford housing. Democrats are looking for policies to save America from the disaster of Trump tariffs. There is enough corporate profitability to do just that without raising product prices.
First, it’s worth repeating that tariffs are a tax on US businesses — not on a foreign country like China. So now when Amazon imports products that tax is paid by Amazon. Is there any doubt that Amazon is going to pass that increase on to the consumer?
Do consumers understand this? Trump is trying to make certain they don’t. Bezos wanted to show how much the Trump tariffs increase the cost of Amazon products, but Trump told him not to, and Bezos backed down. Bezos understood: truth has no place here. If you disobey even a hint of a suggestion from Trump, you know what happens.
Will the tariff spur many manufacturers to change manufacturing sites to the US? It’s an expensive gamble. Experts are divided on whether tariffs will do it (USA Today, Mar 03, 2015).
There is an even stronger argument than uncertainty that tariffs are not needed.
• There’s enough corporate profitability to double workers’ wages but it is spent on stock buybacks.
• Executives are making so much money that they can afford to pay higher taxes.
BuyBacks
“Share buybacks represent a cancer on capitalism: if not remedied, the future of capitalism itself will be at stake”. — Economist William Lazonick
In 2024, American corporations spent nearly $1 trillion in buybacks (Wall Street Horizon, Mar 26, 2025). One trillion is a staggering, inconceivable amount of money. Even 1 billion is hard to imagine. It’s 100 million. Moneymint gives us this example of a billion:
With $1 billion, you could buy:
1,000 luxury cars
100 private jets
10 yachts
2,500 homes
Alternatively, you could:
Feed 10 million people for a year
Build 1,000 schools in developing countries
Give scholarships to 100,000 students
Fund major medical research projects
But we are talking a trillion. One trillion is 1000 billion — so multiply the above by 1000.
That trillion goes into buybacks that produce nothing productive for the corporation or the economy.
For a further explanation of why buybacks are bad see: Why buybacks are a major cause of rising inequality.
So why do corporations do it? There are a number of reasons, but a primary one is that executives take most of their pay in shares. If you see an executive’s pay at 10 million, it’s likely 2 million in cash and 8 million in shares.
• The share buyback increases the value of the remaining shares that the executives own. For example, assume a corporation is worth $1 million and there are 1 million shares, then each share is worth one dollar. If the corporation buys back half a million shares, then each remaining share is worth two dollars.
• Research has shown that share prices go up at the time of the stock buyback which suggests manipulation. Executives are permitted to insider trade by a loophole that Reagan initiated (SEC News Room, June 11, 2018).
• Executives must file a plan setting out when they will sell their shares when they are given the shares to prevent insider trading (SEC Rule 10b5–1(c)(1)). However, they can easily time the stock buyback to magically coincide with the time for sale in their plan.
A study by the Institute for Policy Studies calculated how much worker pay could be increased if the buyback money was given to the workers instead for several corporations. The Lowes example is outrageous:
• “The median Lowe’s workers’compensation fell by 7.6 percent to $22,697 in 2021. The same year, CEO Marvin Ellison spent more than $13 billion on stock buybacks. If those funds had instead been divided among the company’s 325,000 employees, Lowe’s could have given each worker a $40,000 raise”.
• “Ellison raked in $17.9 million last year, 787 times as much as the firm’s median pay.”
Of course, senior management will oppose directing the buyback amounts to workers pay with every ounce of their strength. It would take strong unions backed by a committed government and public support. But at least people should be aware that it could be done without raising product prices, taking one cent from sky high executive pay or lucrative dividends.
The last point about Ellison’s outrageous pay leads to my next point.
Tax The Rich
Allocating the buyback amounts to worker pay would help workers who have jobs with large corporations and enable them to pay more tax on that increased income, but what about the workers who don’t have those jobs or don’t have a job at all.
Keep in mind that using the buyback money to give to workers does not affect executive pay. Until Reagan and the 1980s, executive pay was 20 to 1 median worker pay — and executives had a very comfortable lifestyle. But after the 1980s executives started to take more and more profit for themselves. Clinton and Obama attempted to stop it but failed. There is a myth that shareholders control a corporation. In fact, the CEOs run a corporation like a monarchy because:
• The executives take a lot of their pay in shares and so have votes to elect the Board of Directors.
• The managers of the investment funds and hedge funds will vote as the CEO wishes provided the corporation maximizes dividend payments to them for their own commissions
• Moment pop shareholders sign the proxy from giving the CEO their vote.
For more on how the CEO controls the corporation like a monarchy see:
The solutions in the past and those presently proposed will be ineffective. The only way is to tax the executives as was done until Reagan and when there was shared prosperity in America. Until Reagan, the tax rate was 76%.
The executives didn’t leave. Where could they all go? Would they leave their friends and families and go to a country where the people don’t even speak English? It’s a hollow threat.
But it’s the very opposite of Trump slashing taxes on himself and the other super-rich. Raising taxes only on those making over $1million per year would be a solution to provide universal medical care and free education as well as government infrastructure projects — as FDR did — and to create jobs and retraining for the underemployed giving them jobs with dignity and security.
Yet how far such a solution seems. That must have been how the suffragettes felt when they considered organizing for the right to vote, or the anti-slavers when it seemed like slavery was the foundation of the American economy. The beginning is spreading the word and making people aware of the alternatives. Then finding ways to unite various groups that may have different ideas on the right or the left to understand this common issue that taxes have to be raised on the rich.
