Kimberly-Clark, the multinational corporation behind household brands including Huggies diapers and Kleenex, offered the latest proof this week that the Republican tax overhaul passed in December is not the boon to job creation it was promised to be.
The company announced on Tuesday that it will cut up to 5,500 jobs—13 percent of its workforce—weeks after the tax law reduced its tax rate by two to five percent, saving it billions of dollars according to tax analysts.
Kimberley Clark has historically paid a tax rate of 16.9%, will receive a multi-billion dollar tax windfall on its offshore earnings, and likely faces a significantly lower rate going forward, yet it is still cutting thousands of jobs. https://t.co/dfsImfCK2V— Richard Phillips, Inc. (@taxjusticewonk) January 23, 2018
The tax savings are enabling the company to make the cuts, acknowledged chief financial officer Maria Henry in a conference call with members of the media.
"We also anticipate ongoing annual cash flow benefits from tax reform," Henry said. "That provides us flexibility to continue to allocate significant capital to shareholders while we also fund increased capital spending and our restructuring program over the next few years."
Some of the savings are expected to be used for severance packages for workers and other restructuring costs.
President Donald Trump and other Republican lawmakers traveled the country last fall in the run-up to the congressional votes on their tax plan, assuring Americans that the benefits of the lowered corporate tax rates would trickle down to workers.
"If [companies] are making money, they invest that money, they create more opportunities, more jobs, more research," Sen. Richard Shelby (R-Ala.) told the Huffington Post in November.
Kimberly-Clark's layoffs are just the latest evidence that few companies see their tax cuts as a way to enrich their workers and invest in their communities. On Monday, Bank of America announced it would do away with free online checking accounts, despite its expected $3.5 billion tax cut, while companies including Verizon and Exxon Mobil said before the law was passed that their savings would go to their shareholders.
The company's 2017 revenue was $18.3 billion, but executives have raised concerns about falling sales over the past four years. Kimberly-Clark was subject to a 28.6 percent tax rate in 2017, which will drop to between 23 and 26 percent in 2018—but tax policy analysts say its effective tax rate has actually been much lower.
Kimberley Clark has historically paid a tax rate of 16.9% (https://t.co/i4D9FnsqVC) and likely faces a significantly lower rate going forward, yet it is using its windfall to cut thousands of jobs: https://t.co/eXSdrznrO4— ITEP (@iteptweets) January 24, 2018