Historically high levels of income inequality didn’t stop the Republican Party from driving through a robber baron’s fantasy of wildly unpopular tax cuts for the rich and corporate tax cuts … for the rich. At the time, even though their own constituency showed no enthusiasm for the tax cuts, Republican leaders such as Donald Trump, Mitch McConnell, and Paul Ryan all promised some sort of shiny scraps from the table for everyone else. Those scraps would come in the form of a few hundred dollars here and there, big spending on job creation, and boats all rising with the tide. None of those things happened. But while the Republican Party and Donald Trump may have failed around 99 percent of the country, their tax breaks didn’t fail people like Jamie Dimon, CEO of J.P.Morgan.
In an annual letter to the company’s shareholders, Dimon crowed that “the new lower tax rates added $3.7 billion to net income” this year. Dimon adds this hilarious bit of doublespeak: “We expect that some or eventually most of that increase will be erased as companies compete for customers on products, capabilities and prices.” If you look at what that statement really means, you see the level of duplicity you are dealing with.
This increase in profits is not something that shareholders should expect to continue, because somehow, more demands on the business will mean less profits. So the profits that are being pocketed now are going to suddenly drop, and those tax breaks will not continue to add $3.7 billion in extra profit? That’s a failure of logic. Dimon is basically admitting that because the majority of Americans want to tax the rich, this little laissez-faire robbery is not likely to exist in perpetuity—so enjoy it now.
Dimon then goes on to justify J.P.Morgan’s stock buybacks—the biggest investment that Fortune 500 companies have made—of “$55 billion in stock or approximately 660 million shares, which is nearly 20% of the company’s common shares outstanding,” by saying that you’ve got to buy your own company’s stock when it’s at “tangible book value,” then saying you have to do that at “two times tangible book value” as well. His argument is that while he very recently argued that a company really should buy back its own stock when it’s at a certain price, that same argument works when you can buy it back at twice the price. How does that math work? Dimonmagic! But just in case you are feeling stressed out about how much bullshit is being shoveled in that paragraph of the Dimon letter, he adds, “We want to remind our shareholders that we much prefer to use our capital to grow than to buy back stock.” He-he. I guess they’ll just get to that project another day.
Dimon, who has always been a big supporter of the Republican tax cuts, continues to give lip-service to the mythology that America is a better place because of them. He’s right, you know. It’s a much better place for Jamie Dimon and the people he sees in the rarified spaces in which he travels.