On Jan. 1, 2018, the biggest, most sweeping U.S. corporate tax cut ever enacted went into effect. A year later, we’re able to see how businesses used all that extra cash.
The short answer: to buy back shares. The long answer is slightly more nuanced, but not by much.
Corporations had been lobbying lawmakers for years to reduce the corporate income tax rate—which, at 35 percent, was the highest among the U.S.’s major trading partners. Republicans in Congress and the White House framed 2017’s Tax Cuts and Jobs Act as a means to boost employment, enhance wages, and encourage companies to invest and manufacture in the U.S. Among other things, the law reduced the corporate tax rate to 21 percent, at a cost of as much as $1.5 trillion in lost government revenue over 10 years.