TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Tuesday, February 13, 2018

Former Yale President: CEOs Should Invest Tax Cut Windfall In Workers' Human Capital, Not Bonuses And Buybacks

New York Times op-ed:  How C.E.O.s Should Spend Their Tax Cuts, by Richard Levin (Former President, Yale: Former CEO, Coursera):

Companies are wrestling with how to allocate the windfall from the recent tax act. It’s a nice problem to have.

Home Depot, JetBlue and Pfizer have announced plans to pass tax savings on to shareholders through stock buybacks. Apple, AT&T, Comcast, Verizon and Walt Disney are distributing one-time bonuses to their employees. BNY Mellon, FedEx and JPMorgan Chase are raising wages. Walmart and US Bancorp are giving bonuses and raising wages. Boeing, Southwest Airlines and Wells Fargo have increased their charitable donations. And a few companies, perhaps fewer than the White House expected, have joined with Amazon to announce ambitious programs of capital investment that will create jobs and increase productivity.

Neglected in the public discussion is yet another strategy, with large potential benefits for every company and for the nation as a whole: investing in human capital. Lost in the noise was Boeing’s announcement that it will spend $100 million on work force development, training and education, and Disney’s investment of $50 million to cover tuition payments for its hourly employees. ...

Today, thanks to online technology, there has been stunning improvement in both the quantity and quality of learning opportunities available to employees. The largest platforms offer thousands of courses from more than 200 of the world’s best universities, as well as state-of-the-art content from top technology companies. Many Fortune 500 companies are testing the use of such courses to develop the skills of their employees, and a few have begun large-scale deployment, offering customized courses to help employees gain competency in emerging fields such as big data, machine learning, deep learning and the internet of things. ...

The tax cut has given companies an opportunity to invest in the future. So, to America’s chief executives: Don’t spend it all on buybacks and bonuses. Invest in plants, equipment and research. But the best investment you can make with that money is in your people.

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I'd be more impressed if university presidents, as he once was, were insisting that any job bonus they might receive be invested instead in students, perhaps by lowering the cost of tuition, so they don't spend the next 20 years paying off their debt. These university officials are not going to starve without their high-six-figure salaries.

And yeah, I also noticed this remark: " The largest platforms offer thousands of courses from more than 200 of the world’s best universities..." Is he looking ooking to make more money for Yale's online school? I suspect so. A quick DuckDuckGo search turned up this link:

I grow tired of these people. Whatever they say, whatever they do, you can always find a money angle lurking the the shadows. Why else would he mention 200 elite universities rather than the more practical training available at local community colleges?

Posted by: Michael W. Perry | Feb 13, 2018 6:33:43 AM

Tl;dr: CEO of Coursera asks companies to spend their tax cuts on Coursera.

Posted by: Unemployed Northeastern | Feb 13, 2018 10:33:26 AM

Progressive Tax Policy in summary:
Best: make sure folks can't keep the money they earn.
Second best: browbeat them into spending it on things they approve of (read: they have an interest in).

Posted by: MG | Feb 13, 2018 1:07:58 PM

@ Michael W. Perry

Maybe the first thing you should do is follow the link and READ slowly and carefully. Much if not all of the online content is free. Presidents of Yale don't have to lurk in the shadows and send hidden messages to generate revenue. Yale's endowment is measured in the billions. I grow tired of these people who regularly spew forth nonsense because they are so content marinating in their ignorance.

Posted by: Benedictus | Feb 14, 2018 12:17:43 PM