Billionaire investor Paul Tudor Jones cofounded the nonprofit Just Capital in 2013 to measure what Americans want from corporations and evaluate which of these companies are contributing to a "more just" society.
Just Capital has analyzed 120 of these companies, whose savings account for about one-third of the total, and found that only about 6% of the windfall was going toward wages that weren’t one-time bonuses.
This post is part of Business Insider’s ongoing series on Better Capitalism.
When Congress passed the Republican tax plan in December, President Donald Trump said it was "above all else a jobs bill."
By drastically cutting the corporate tax rate from 35% to 21%, the Trump administration said it would incentivize companies to stay in the United States and in turn save them $1 trillion over the next decade, with $150 billion this year, that they could invest in workers and job creation.
Investor Paul Tudor Jones’ nonprofit Just Capital has been monitoring how corporations in the Russell 1000 have been spending their tax windfall, and it’s found that while many are investing in their workers, the majority of this money is going to shareholders in the form of stock buybacks, dividends, or retained earnings.
Just measures that spending across seven categories. Using a 2017 survey of 4,100 Americans, it found that Americans rank, in order from most to least importance, a company’s behavior regarding workers, customers, products, environment, communities, jobs, and management and shareholders.
"What we are trying to do with this analysis, as with all our work, is track, in a fair and unbiased way, how corporate actions track the priorities of the American people," Just CEO Martin Whittaker told Business Insider. "There are few better indicators of this than how company leaders allocate their capital, especially capital they’ve received unexpectedly thanks to the tax windfall."
As of this writing, Just Capital has analyzed 121 of the Russell 1000 companies, which account for about one-third of the index’s value.
Here’s the current breakdown:
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Tax Savings BI Graphics
Shayanne Gal/Business Insider
Just defines the spending categories as follows:
Workers: "wage increases, one-time bonuses, expanded worker benefits, spending on employee training and other services"
Customers: "all reductions in rates and fees passed on to customers, or spending on improving customer experience, privacy, or safety"
Products: "investments in improving product benefits or quality"
Communities: "charitable giving, matching employee donations, volunteering, and management of social impacts in the supply chain"
Jobs: "commitment to job creation or capital investment that is tabbed for job creating activities, either explicitly or implicitly"
Shareholders: "stock buybacks, direct distributions, or retained earnings" — with the assumption that "proceeds not publicly earmarked" for any of the other categories fall into this one
Just research director Rob Du Boff said that the percentages are estimates based upon recent announcements and other public records.
And while the overall numbers so far show that most of the tax savings will go to shareholders, Just highlighted companies that are using the windfall to invest in long-term value creation rather than a boosted stock price. These include Boeing, FedEx, JPMorgan Chase, and Apple.
"We are not saying what corporations should do with their money," Whittaker said. "That is for them to decide. What we are showing is whether their decisions on allocating capital match the stated priorities of the American people."
