The Republicans gave their “Tax Cuts and Jobs Act” a cruel joke of a name, since most of the tax cuts go to corporations that have made it very clear they won’t use the savings to hire more workers. But in industries where jobs could be automated, it’s even worse: companies stand to save money on buying the machines to replace their workers, and to save still more money on firing the workers.
Under the law, companies will now be able to write off the cost of new equipment immediately rather than over an extended time, thereby lowering their short-term taxes. Because money is worth more now than in the future (the time value of money), they will save more in the long run from deductions than they would have previously. With this provision set to begin to phase out in five years, retailers looking to automate are under the gun. [...]
Meanwhile, as the corporate tax rate drops from 35 percent to 21 percent, companies can keep a greater share of their income. That also means they can pocket more savings achieved through cost cutting, like laying off workers.
Broken down: If a retailer saves $100 in wages and benefits by laying off an employee in 2017, its after-tax savings is $65 ($100 savings less $35 paid in taxes). If it does the same in 2018, its after-tax benefit is $79 ($100 in savings less $21 paid in taxes).
A retailer thus pockets $14 more from laying off a worker in 2018 than in 2017, a jump of more than 20 percent.
Happy new year, everyone! Welcome to the new Republican jobs economy.