Eight of America’s biggest banks will receive a $15.3 billion windfall next year thanks to the recently passed GOP tax plan, according to a private report from Goldman Sachs obtained by ThinkProgress.
Seven of the country’s biggest banks will save between $704 million and $3.7 billion next year due to the corporate tax rate reduction, according to Goldman Sachs’ calculations. The report looks at Bank of America Corporation ($3.5 billion in savings), Citigroup ($1.4 billion), J.P. Morgan ($3.3 billion), Morgan Stanley ($833 million), Wells Fargo ($3.7 billion), PNC ($704 million), and U.S. Bancorp ($766 million), and while it doesn’t include Goldman Sachs’ own expected savings, using the same formula applied to the seven other banks, Goldman Sachs can expect to save $1.06 billion next year based on their $7.4 billion in revenue in 2016.
Republicans have promised that the tax cuts, which almost exclusively favor big corporations and wealthy individuals, will have a “trickle-down” effect, and that companies will use their tax savings to invest in workers and create new jobs. Trump administration officials have promised an increase in wages of at least $4,000 per year.
On Wednesday, Wells Fargo announced it would be raising its minimum wage to $15 an hour — $1.50 more than its current floor. Advocates of the tax plan pointed to the raises as proof that Trump’s tax plan was already working to raise wages, but a spokesperson for the bank clarified Thursday that the wage increases were planned and not linked to the tax bill.
The raises — which, again, are not even specifically linked to the tax bill — will cost the bank approximately $80 million, a figure dwarfed by its $3.7 billion total savings, and Wells Fargo CEO Tim Sloan told CNN Money Tuesday that the bank also planned to invest in major share buybacks, a move that will enhance its shareholders’ wealth with no benefit to its wage-earning workers.
“Is it our goal to increase return to our shareholders and do we have an excess amount of capital? The answer to both is, yes,” Sloan said. “So our expectation should be that we will continue to increase our dividend and our share buybacks next year and the year after that and the year after that.”
None of the other banks included in the Goldman Sachs report — nor Goldman itself — has announced they will be using their tax cuts to increase wages.
The savings also essentially mean that the Trump administration is reimbursing JP Morgan, Bank of America, and other banks for fines they were forced to pay during the Obama administration related to their role in the mortgage crisis . In 2014, Bank of America agreed to pay a $17 billion settlement, with $7 billion earmarked for consumer relief. One year earlier, J.P. Morgan agreed to a $13 billion settlement, $4 billion of which was earmarked for consumer relief.
Many of the same middle class families who were victimized by Bank of America and others — those making raise between $40,000 and $50,000 a year — will see their taxes rise by more than $5 billion. 92 million families making $200,000 a year or less will see their taxes hiked over the next decade, and 13 million people will lose their health insurance.