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tax cuts
Trump's Tariffs Ended Up Being Yet Another Regressive Tax on the Working Class
In other words, working Americans, who make up most of the nation’s consumers, paid for checks that are now being written to corporations and that will enrich their (mostly wealthy) shareholders. Trump’s tariffs have played out as a straightforward redistribution of income from ordinary Americans to corporations, much like the two other major tax cuts he’s pushed through as president.
Of course, this is not how Trump marketed his trade policies.
Because he chose instead to levy these tariffs using authority the law simply doesn’t give him, the Trump tariff experiment now amounts to a multibillion-dollar transfer of cash from working families to shareholders.
The administration promised, at various points, that the new tariff revenue would be enough to replace the entire federal income tax, boost military spending by 50%, pay a $2,000 dividend to every American, and somehow simultaneously reduce the national debt.
The court’s February decision ruled that the tariffs—imposed by Trump under the International Emergency Economic Powers Act (IEEPA)—were illegal and must be refunded to the companies that had initially paid them. This was no surprise—the IEEPA was enacted in 1977 to restrict presidential power, not expand it. The decision meant that fully $166 billion, well over half of the additional tariffs collected to date by the Trump administration, must be refunded.
For the millions of Americans who saw the prices of almost everything they buy increased by tariffs, the obvious question was how—if at all—these companies would pass through their tariff refunds to consumers. But as a series of corporate earnings calls have made clear over the past several weeks, in general these corporations are treating the tariff refunds—which often come with interest paid on top—not as something they should duly pass on to consumers, but a way of padding their bottom line. And this is true even of companies that acknowledged raising prices last year to offset the tariffs.
For example, in an earnings call back in summer 2025, a Nike executive estimated the company would see a tariff impact of around $1 billion, and announced that it “intend[s] to fully mitigate the impact” of the tariffs with a series of steps including “surgical price increase in the United States.” The $5 to $10 price increases introduced by the company that summer were transparently Nike’s “surgical” way of passing the buck to consumers.
Yet when Nike announced earlier this summer that it would see close to a $1 billion tariff refund, company officials simply noted that this “unplanned benefit” would boost the company’s earnings for the quarter. As a result, consumers have filed a class-action suit against Nike for extracting a double benefit from the Trump tariffs—first boosting shoe prices to offset the cost of the tariffs and then pocketing the tariff refunds.
Some companies claim that part of their refunds will lower prices for consumers going forward, but this is meaningless spin that is divorced from how prices are set. Receiving unexpected cash from the government does not create an incentive for a company to charge customers less for its products than the market will bear. But several corporations are making this claim to distract the public from their windfall.
For example, Dollar Tree recently reported it will receive $383 million in tariff refunds and said that $22 million of that $383 million in refunds will go toward “higher markdowns… related to our tariff reinvestment initiative.” While some of the remaining refund will go toward “customer messaging and marketing, and incremental improvements in store conditions and operations,” Dollar Tree has not said how much more it will devote to price markdowns. But the company’s leaders were far less squishy about announcing a $605 million stock buyback for the quarter—more than 27 times the $22 million it recorded for tariff-related markdowns.
Other big companies have vaguely promised that consumers will benefit from the giant refund checks without saying how much. Walmart says it is using refunds to support “price leadership.” Target says it will “invest in price.” Lowe’s initially promised “customer-facing actions” that will “reinforce our value proposition,” although the company subsequently pivoted toward saying its leaders “feel strongly that we want to deliver strong profitability for our shareholders.” But none have said what share of their tariff refund will actually make its way back to consumers. Levi Strauss, having previously admitted it would be taking “thoughtful, targeted pricing actions” in response to the tariffs, tops them all by saying of its $80 million tariff refund windfall only that “we haven’t figured out what to do with it.” (Levi Strauss now also faces a proposed class-action suit for not returning tariffs to consumers.)
Some companies aren’t even bothering to pretend they’re interested in offering relief to their customers. Shoe maker Steve Madden, which previously acknowledged “adjusting pricing” in response to the tariffs and subsequently noted it was “pleased overall with consumer acceptance of the price increases,” now says it will use its $92 million in tariff refunds to “pay down debt.”
This unmistakable shift of cash away from consumers and into the pockets of corporations and their shareholders is, on one level, not the companies’ fault. Once companies incorporated their tariffs into price increases across all the items they sell, there was no practical way to identify exactly which consumers bore which portion of those tariffs, or to reverse those price increases dollar for dollar: That egg can’t be unscrambled.
The ultimate responsibility for this regressive tax shift falls on the Trump administration, which chose to impose these tariffs unilaterally, without seeking the congressional authorization the law required. If Trump had gotten the approval he needed from Congress to levy these tariffs, this whole episode would merely have been an economically catastrophic, regressive tax hike on consumers.
But because he chose instead to levy these tariffs using authority the law simply doesn’t give him, the Trump tariff experiment now amounts to a multibillion-dollar transfer of cash from working families to shareholders. In that sense, Trump’s illegal tariffs are beginning to look a lot like his much-ballyhooed tax cuts of 2017 and 2025: Working families were promised big tax cuts, but corporations and their shareholders ultimately made out best.
CEOs Get Rich Underpaying Their Workers and Then Don't Stand Up for Them
How have the largest employers of low-wage workers responded to these threats? This year’s edition of the annual Institute for Policy Studies Executive Excess report takes a look by zeroing in on the 100 S&P 500 firms with the lowest median wages, a group we’ve dubbed the “Low-Wage 100.” The country’s most profitable retailers, fast food chains, and hospitality firms dominate the list.
Low-Wage 100 CEOs Have Remained Silent About Threats to Workers
Our key finding: Low-Wage 100 CEOs have raised nary a peep about ICE attacks on their employees or the gutting of our social safety net. And, with few exceptions, they have obediently rolled back DEI programs.
By looking the other way as low-wage workers face surging threats, corporate CEOs have shown even more clearly that we cannot rely on them to voluntarily do the right thing.
How did these corporate leaders choose to deploy their vast political power instead? Passage of the July 2025 budget bill was a top priority. This legislation will throw millions of Americans off Medicaid and the Supplemental Nutrition Assistance Program (SNAP) to pay for more tax cuts for the rich and a massive increase in ICE funding.
Under the bill’s reduced top marginal tax rate, chief executives will be able to take home an even greater share of their fat paychecks. In 2025, average CEO compensation within the Low-Wage 100 hit $17.5 million. By contrast, the group’s average median worker pay sat at just $36,571 and their average CEO-worker pay gap came to 614 to 1.
Low-Wage 100 Firms Won Tax Cuts for the Rich, Paid for With Cuts to Aid Programs Their Employees Rely On
We reviewed public statements about this budget legislation by Low-Wage 100 firms and the corporate lobby groups that represent them. Each statement cheered the law’s tax cuts, which will overwhelmingly benefit the wealthy. The International Franchise Association even praised the doubling of the estate tax exemption, a tax break that will benefit less than 0.2% of the population.
Not one statement expressed concern about the law’s drastic Medicaid and SNAP cuts. A recent Government Accountability Office report lists the top employers of workers receiving Medicaid and SNAP in a sampling of states where this information is available. Low-Wage 100 firms dominate the lists.
Long-Term Trends of Executive Excess
Given past trends, Low-Wage 100 CEOs’ muted response to the increased threats against their employees is hardly a surprise. The pandemic opened the eyes of many Americans to the essential value of frontline low-wage workers. But even that national crisis did not lead to more equitable sharing of corporate wealth.
Between 2019 and 2025, the Low-Wage 100’s average CEO pay rose 41.4%, double the 20.7% increase in their average median worker pay.
A technical note: we did not adjust these figures for US inflation because median pay figures in corporate SEC filings are based on a company’s global workforce. But many Low-Wage 100 firms have the vast majority of their employees in the United States. In fact, that’s the case for 5 of the 10 Low-Wage 100 corporations with the lowest median pay (Ross Stores, Ulta Beauty, TJX, Yum! Brands, and Dollar Tree).
Buybacks Bonanza
To further enrich their wealthy executives, Low-Wage 100 firms have spent over $718 billion repurchasing their own stock over the past seven years. This formerly illegal financial maneuver artificially boosts the value of a company’s shares and, in the process, pumps up the value of the stock-based compensation that makes up about 80% of corporate CEO compensation.
Every dollar spent on buybacks represents a dollar not spent on worker wages or long-term productive investments. The Lowe’s home improvement store’s $46.8 billion expenditures on buybacks over the past seven years could have covered the cost of a $24,235 bonus for each of their 276,000 employees every year during that period. Median pay at Lowe’s in 2025: $37,371.
Policy Changes to Curb Executive Excess
The Low-Wage 100 represent a business model designed to deliver staggering personal gains for top executives by squeezing their workers. This predominant model is shredding our social fabric and threatening our democracy. We clearly need to build worker power and raise the minimum wage to a living wage. But to solve this problem we also need to curb runaway CEO pay.
Governments at all levels should explore options for leveraging tax policies and procurement and subsidy policies against executive excess. These policy solutions have serious bipartisan potential.
For instance, one survey found that 89% of Democratic and 71% of Republican likely voters support a tax hike on corporations that pay their CEO over 50 or more times what they pay their median employees. A bipartisan provision in the pending Senate defense authorization bill would bar military contractors from engaging in CEO pay-inflating stock buybacks.
Congress should also increase the existing 1% stock buybacks tax, ideally to a level high enough to discourage this activity. But even if companies continued the wasteful practice, hiking this tax would generate additional revenue for combatting inequality. If a 4% buyback levy had been in place between 2023 and 2025, the Low-Wage 100 would have owed approximately $9.3 billion in additional federal taxes.
By looking the other way as low-wage workers face surging threats, corporate CEOs have shown even more clearly that we cannot rely on them to voluntarily do the right thing. Lawmakers must take responsible action to narrow our dangerous economic divides.
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