Eleven top US consumer goods corporations spent more than three times as much on share buybacks as they did on taxes, using their savings from the 2017 Donald Trump tax cuts to supercharge purchases that enriched investors instead of lowering prices on goods essential to daily life, according to a new report.
The findings are part of a new analysis of company filings by the Groundwork Collaborative economic thinktank. They come as the US president proposes $5tn in new tax cuts that would again lower the corporate tax rate, and likely lead to more buybacks.
PepsiCo, Comcast, United Healthcare, personal care giant Kimberly Clark and the other companies have collectively recorded nearly $500bn in profits since the last cuts. They enacted $463bn in buybacks and paid just $140bn in federal taxes.
The figures are “startling”, said Liz Pancotti, a study co-author and director of policy with the Groundwork Collaborative, and highlight how the cuts incentivize buybacks.
“The companies are now throwing massive amounts of money at investors who are largely already wealthy people,” Pancotti added. “This is how you get the staggering wealth inequality in this country.”
Buybacks are a company’s purchase of its outstanding stock shares, which reduces the number of shares available on the market. That juices the stock’s value and investors’ wealth. By one estimate, publicly traded companies now collectively spend as much as 90% of their earnings on buybacks instead of reinvesting to keep prices down, or raising workers’ wages.
The 2017 Tax Cuts and Jobs Act nearly halved the effective corporate tax rate from 35% to 21% and was among Trump’s most unpopular initiatives because it largely benefited the wealthy and corporations.
Undeterred, Trump is now proposing lowering the corporate rate to 17%, which could generate a $50bn annual windfall to the 100 largest US corporations.
Food prices have shot up since the last cuts, in part driven by price gouging during and after the pandemic and Ukraine war.
General Mills and PepsiCo, two of the biggest packaged food and beverage companies, have returned $66bn to shareholders and paid just $16bn in taxes since the cuts.
As inflation hit its peak, the two companies drew ire as they increased prices and shrunk some of their product sizes. The tax cuts and price hikes have been good for their bottom lines: compared with the two years prior to the tax cut’s enactment, PepsiCo’s effective tax rate is now 11% lower and profits are up 58%.
Similarly, personal good giants Kimberly Clark and Procter Gamble have together returned $125bn to shareholders and paid just $18bn in taxes. They’ve seen their profits soar by at least 70% as they raise prices across their multitude of brands and consumers pay about one-third more overall on personal goods.
The two companies control up to 80% of the diaper market. The average US family in 20204 paid about $1,000 more each year per child than prior to the pandemic, prompting some state governments to start covering the costs under Medicaid.
But Republicans are proposing to in part pay for the next round of tax cuts by slashing Medicaid and other social service programs, which disproportionately benefit lower- and middle-income families. The cuts create a massive transfer of wealth from the lower and middle classes to the upper, Pancotti said, and companies are incentivized to spend their earnings this way.
“If you get to keep a larger piece of the pie because Uncle Sam takes even less and, then, it’s a lot more fun to rake in these profits and distribute them to the shareholders,” Pancotti said. “Now Trump is planning to reward them with even more tax cuts for doing just that.”
Housing costs have soared in recent years, in part fueled by a 30% jump in the price of new builds since the last tax cut. DR Horton and Lennar, the two largest US homebuilders, have returned $17bn to shareholders and paid $13bn in taxes.
Similarly, Comcast has blasted customers with a torrent of base price increases and new junk fees, even as it returned billions to shareholders. Its effective tax rate is 12% lower and its profits are 88% higher than prior to the cuts.
Meanwhile, AutoZone’s effective tax rate is now 37% lower and profits are 116% higher, and it used the windfall to triple the level of returns to shareholders.
The spending is part of the larger pattern, said Lenore Palladino, a University of Massachusetts economist who has authored several papers on the issue. She said buybacks are a symptom of the larger problem: “shareholder primacy”.
“It’s the legal fact that corporations exist solely to make money for shareholders – that’s their purpose,” Palladino said, labeling buybacks “legal manipulation” of stock price. “It’s weird that it’s totally legal because we have all these other rules against manipulating the price of stocks.”
Executives’ compensation is tied to stock price, and higher share prices keep activist shareholders at bay, so there’s plenty of reason for company leadership to enact them.
While lawmakers have proposed solutions that nibble around the edges, anything short of a ban on buybacks, or limits similar to those in other countries’ advanced stock markets, won’t address the problem, Palladino said.
“In today’s political climate, calling attention to how much these practices contribute to widening economic inequality and how buybacks are a huge waste of money is important,” she said. “When we have the political will to do policy … we need at a bare minimum bright line limits on these.”
This article was amended on 9 April 2025. The previous version incorrectly said that the corporations in the analysis spent more than three times more on buybacks than taxes, instead of three times as much.
