Stealing from the Poor to Give to the Rich
The Pitch: Economic Update for July 3rd, 2025
Friends,
This week, Senate Republicans just barely managed to send the Trump Administration’s tax bill back to the House for final approval. At the time of this writing, the bill just passed through the House. The toplines for this bill are that it wipes out big BIden-era investments in green energy that prepare our country for the future, it takes away SNAP benefits from millions of low-income Americans, and it strips Medicare coverage from nearly 12 million Americans—all in exchange for a huge tax break for the wealthiest Americans. This chart from the New York Times shows how much the wealthy few benefit from the bill (the big orange bar at the top of the graph) while investments in working Americans are slashed (the negative turquoise bars at the bottom of the graph.)
Tony Romm at the New York Times says that Yale’s Budget Lab analysis very clearly demonstrates the reverse-Robin Hood nature of the bill: “Americans who comprise the bottom fifth of all earners would see their annual after-tax incomes fall on average by 2.3 percent within the next decade, while those at the top would see about a 2.3 percent boost,” Romm writes. Ultimately, the tax cuts would result in “more than $118,000 in gains for someone making over $3 million.”
There are countless ways this bill enriches the wealthy and empowers the powerful while also shrinking the economy for working Americans. For instance, the Energy Innovation Policy & Technology think tank warns that “the bill drastically changes and terminates existing clean energy tax credits passed by Congress in 2022, which to date have generated $9.12 billion in new private-led investment across 11 domestic energy and manufacturing facilities in Kentucky,” in exchange for huge giveaways to oil and gas companies. The bill also threatens clean energy jobs in Arizona, and it slashes credits toward the creation of clean energy projects around the country, which were projected to create some nine million jobs over the next decade.
Additionally, the bill adds anywhere from $3 to $5 trillion dollars to the national debt over the next decade in order to redistribute wealth to the already-wealthiest Americans. While the national debt is often overplayed in importance by trickle-downers seeking to cut investments in the working class—debt is a healthy part of a nation’s economy— it makes absolutely no sense to incur trillions of dollars in debt just to hand those trillions of dollars away to millionaires and billionaires, who will then hoard the money for themselves and their heirs.
As Heidi Sheirholz writes at the Economic Policy Institute, “If the Republicans wanted to add $4 trillion to the national debt, they could have instead written a $12,000 check to each and every adult and child in the United States.” Those checks, at least, would have been spent in every community in the United States, creating jobs through increased consumer demand. Instead, the money is going to be added to the coffers of millionaires and billionaires—essentially sucked out of the economy.
When Donald Trump took the oath of office in January of this year, he inherited an economy from President Biden that was generally pretty strong. Paychecks were growing, price increases from pandemic-era shocks were slowly coming down, and America had the strongest pandemic recovery in the world. But through his erratic campaign of tariffs and this tax bill, Trump seems to be dead-set on ripping up that strong foundation and instead instating a trickle-down economic regime that’s even more extreme than the Reagan era.
In the coming weeks and months, we’ll keep analyzing the impacts of this bill and its effects on working Americans, and we’ll continue to emphasize the policies and economic ideas that take on trickle-down directly. As we’ll see in the next section, the American people understand that the game is rigged against them, and they’re hungry for something more than the same old trickle-down regime that this tax bill represents.
The Latest Economic News and Updates
The Trickle-Down Tax Bill Is Wildly Unpopular. Will That Make a Difference?
Republican leaders are dragging out the same old tired trickle-down lines to support the passage of the Trump Administration’s tax bill. US Treasury Secretary Scott Bessent told Fox News that this bill “will set off growth like we have never seen before,” adding that “once you see the growth trajectory change to an upward bias, the bill more than pays for itself.”
Even though this is just a shameless repetition of a long-debunked trickle-down talking point, let’s look at the results of the last Trump tax bill for confirmation. William Gale at Brookings reports that Trump’s 2017 tax bill, the so-called Tax Cuts and Jobs Act, “did not pay for itself, nor is it likely to do so in the future. There are many debates to have about the TCJA, but whether it raised or reduced revenues in 2018 should not be one of them.”
And Senator John Barrasso of Wyoming claimed that Republicans passed the bill through the Senate because “We want to grow the economy.” If that were true, they would direct those investments to working Americans, not the super-rich. The SNAP benefits that this bill slashes, for instance, were spent directly in grocery stores and farmer’s markets in local economies, creating jobs through consumer demand. (For more information, the Pitchfork Economics podcast recently featured a great conversation with Lily Roberts about the economic benefits of SNAP.) Many small businesses, hospitals, and healthcare providers are going to see a sharp decrease in income when SNAP and Medicaid benefits disappear, and job losses will follow.
The good news is that this bill is very unpopular. Navigator Research polling shows that roughly seven out of ten Americans disagree with the content of the Trump tax bill when they’re told about it. Even more Americans hate the bill when they’re told that it results in cuts to healthcare coverage for seniors and children. As President Trump himself noted recently, Medicare, Medicaid, and Social Security are three tremendously popular programs that are beloved by a vast majority of voters.
But the bad news is that six out of ten Americans have heard “a little” or “nothing” about the tax bill—a painful reminder that Americans are lost in their own social media bubbles where important news simply can’t reach them.
This is the challenge we’re facing in American politics today. The majority of Americans are unhappy with the status quo. They realize that we live in an oligarchy in which the wealthiest billionaires are running the country to benefit themselves, at the expense of tens of millions of working Americans. But many Americans feel powerless to change the status quo. Another big chunk of disillusioned voters buy into a trickle-down worldview that wrongheadedly casts working Americans, and not the super-rich, as a drag on the economy that must be managed by tax cuts, deregulation and wage suppression.
Trickle-down economics might seem inevitable and invulnerable at this moment, but polling shows that a lot of Americans are ready for something new to be born—a new economics that empowers everyone, not just the few at the top. The stage is set for a change, and we have to be ready when that moment of change arrives.
This 4th of July, I hope you’ll take some time to recommit to communicating to your fellow Americans how the economy really works. It’s not super-rich people who make the economy grow, it’s all of us—the paychecks of working people. When the American middle-class was at its strongest, so was the American economy.
And most importantly, we have to remember that just a few decades before the American middle class was at its strongest, the nation was in the throes of another gilded age in which a wealthy few controlled the levers of power. When you study our nation’s history, you understand that movements can rise into and fall out of power in a remarkably short period of time.
American Corporations Just Broke a Dangerous Record
In the first quarter of this year, American corporations on the S&P 500 set a new record: They bought back $293.5 billion in stock. That’s about 20% higher than the buybacks performed in the last quarter of 2024, and a 24% increase over buybacks performed in the first quarter of 2024. The previous record for stock buybacks was set in 2022, when corporations bought back $281 billion in stock.
If you’re unfamiliar with the term, “stock buybacks” are exactly what the name suggests: It’s corporations using profits to buy back shares of their own stock to reduce the number of total shares available, thereby increasing the value of existing shares. It’s a transfer of wealth directly from the company to individual shareholders. Buybacks used to be illegal until the Reagan Administration, and now they’re a regular occurrence for the nation’s wealthiest corporations.
The problem is that those profits used to go to raise wages, to invest in research & development, and to strengthen the future of the company. Now, nearly $300 billion in corporate profit was given away to an elite class of shareholders in the first three months of 2025, with absolutely no strings attached. Buybacks are one of the primary mechanisms through which the wealthiest 1% has enriched themselves over the last 40 years. This year’s record buyback looting of corporate profits shows that CEOs and corporate executives are only getting bolder with their buyback strategy.
President Biden passed a first-of-its-kind 1% tax on buybacks two years ago, and that tax clearly hasn’t deterred corporate boards from performing buybacks. There are plenty of proposals to rein in corporate abuse of buybacks, including Senator Cory Booker’s legislation that would require corporations to pay a dividend to its workers whenever they performed a buyback. Other proposals vary widely, from a 2 to 4% buyback tax to a distributed profits tax to banning buybacks outright.
If you want to learn more about stock buybacks, Civic Ventures produced a free comic book explaining the history of buybacks and why they’re so damaging for the American economy. Please read it and pass it on to your social networks.
Winners and Losers in the Race to Catch International Tax Cheats
“Spain and Brazil have launched a joint initiative to promote a higher tax take from the super-rich worldwide aimed at tackling soaring inequality by ensuring those with the most pay their fair share,” reports the United Nations.
The problem, the UN reports, is that “the richest individuals often contribute less to public finances than ordinary taxpayers, thanks to lower effective tax rates and legal loopholes.” As a result, “the wealthiest one per cent of the global population owns more than 95 per cent of humanity combined.”
That’s why Spain and Brazil have announced a plan to work together to catch international tax cheats. Their plan “prioritises information sharing - between governments and tax authorities – to help expose gaps in tax systems, close loopholes and combat evasion and avoidance.”
The nations are also “considering steps toward a global wealth registry,” which would stop the global super-rich from fleeing to tax havens and obscuring their wealth from authorities around the world.
But while Brazil and Spain are leading the way on a path to international progressive taxation, the United States is falling behind. Politico reports that “G7 countries have agreed to exempt the United States from applying a 15 percent minimum corporate tax rate.”
President Biden championed the idea of a 15 percent global minimum corporate tax rate in 2021. The idea was to eliminate tax havens that allow corporations to avoid paying taxes in the countries that they do business in. Now the Trump Administration has used the threat of tariffs to back out of the deal that America spearheaded less than five years ago.
In an age of globalization, it makes sense for all nations to agree to certain minimum standards that ensure no corporation or nation can exploit the system to enrich themselves at every other nation’s expense. It’s heartening to see Brazil and Spain step up to demonstrate leadership in this field, even as the United States shamefully abdicates its role as a leader in the fight for a global minimum corporate tax rate.
This Week in Trickle-Down
“From California grocery stores to chicken chains in suburban D.C., businesses that serve large immigrant populations are reporting shifts in consumer behavior — fewer in-store visits, lower receipts and more delivery orders — that threaten to drag down local economies, according to interviews with business owners, as well as spending data,” reports the Washington Post.
Trickle-downers love to promote the idea of work requirements as a way to curb excesses of social safety net programs. The Contrarian explains why work requirements actually make programs more costly and inefficient, while freezing out disabled and disadvantaged people who need them the most: “Moving forward with such a policy at a time of economic uncertainty would result in millions of people losing care, and more than 15,400 avoidable deaths, all to pay for tax cuts for the wealthy.”
This Week in Middle-Out
Several states and localities increased their minimum wage on July 1st. The Economic Policy Institute explains that 880,000 workers around the country will benefit directly from those wage increases. “57.9% of affected workers are women,” EPI notes, and “the policy disproportionately affects Black and Hispanic workers.” Some 45% of the workers are full-time employees, and more than one in five of them are parents.
This Week on the Pitchfork Economics Podcast
This summer, the Pitchfork Economics podcast is presenting a “Back to Basics” series that focuses on the economic issues that matter most to Americans today. The series begins with a revisitation of the very first episode of Pitchfork Economics, an interview with former Elizabeth Warren adviser Ganesh Sitaraman that explains the problem of American inequality, explores why the stories we use to talk about economics are broken, and proposes a way forward for building an economy that grows from the middle out, not the top down. This series is a great way to introduce your friends and families to the foundation of middle-out economics in simple, easy-to-understand language.
Closing Thoughts
You can’t have a capitalist economy without robust competition. Competition between two or more competing businesses is the force that keeps prices low, wages high, and processes efficient.
We’ve seen what happens when corporations buy up their closest competitors. In the grocery industry, the resulting monopoly powers force wages lower and push prices up. In the tech sector, big firms like Facebook routinely buy and then bury new apps that might otherwise eventually grow to be competitors, ensuring total control over services like social media networking apps that used to be rapidly evolving fields.
The bigger the firms, the more likely they are to engage in strictly anti-competitive behavior, colluding with potential rivals and dominating over the market until customers eventually have no choice.
There’s a large body of work demonstrating the harm that monopolies cause in capitalist economies, but a new study proves that the anti-competitive drive goes much deeper in modern corporations. It turns out that you don’t need to buy a competitor in order to collude—you just need to share corporate executives.
In a paper titled “Collusion Through Common Leadership,” Alejandro Herrera-Caicedo, Jessica Jeffers & Elena Prager question “whether common leadership, defined as two firms sharing executives or board directors, contributes to collusion.”
After examining labor market data that was uncovered during court proceedings, the authors found that “the probability of collusion between two firms increases by 12 percentage points after the onset of common leadership, compared to a baseline rate of 1.2 percent in the absence of common leaders.”
How can two corporations that are seemingly in direct competition with one another share common leadership? Isn’t that illegal? Technically, the authors note, there are laws banning the practice. But barring two years in which the Biden Administration threatened to enforce existing common-leadership laws, the authors found that “enforcement of this prohibition was dormant.”
In fact, they find, it’s gotten so common that “One third of public companies share a high-level leader with another firm, disproportionately firms in the same industry.“ These common leaders share information and business strategies between companies, allowing them to align prices, wages, and labor standards.
“We find that entry into collusive agreements is indeed more likely among pairs of firms that share common leaders. Our empirical context is the largest known case of modern US labor market collusion,” the authors write. They explain, “in the early 2000s, several dozen Silicon Valley firms entered into agreements not to recruit one another’s employees. A series of lawsuits ultimately revealed detailed evidence about these illegal “no-poaching” agreements. The unsealed information includes email trails and human resources policy documents that explicitly list partner firms with agreements not to recruit.”
Corporations that share leaders are exponentially more likely to engage in anti-competitive, collusive behavior. “In the sample of known colluders from the Silicon Valley case, 62 percent of firms share common leaders with at least one other firm in the sample during our main sample period of 2000–2009.”
The authors find that “Five percent of firm pairs that never share leaders eventually collude. By contrast, 35 percent of firm pairs that ever share leaders eventually collude.”
This is a practice that actively harms consumers and workers, while benefiting the very executives who double-dip on the boards of companies that should be competing with each other. It enriches the few at the expense of the many. And—let’s not forget—the practice is technically against the law. But a law doesn’t mean anything unless it’s enforced, and this paper proves that the practice of common leadership is widespread.
Thankfully, this is an easy issue to understand, and the enforcement of common leadership laws seems as though it would be an incredibly popular issue for American voters, who have shown increasing anger at wealthy elites who bend the rules in their own favor. In a world full of complicated issues and nuanced public perceptions, this one is a no-brainer for candidates who want to win over voters who are exhausted by high prices, low pay, and systems that have been rigged against them.
Be kind. Stay strong.
Zach