$1.5 Trillion Corporate Tax Cut Scorecard: 84% of Companies Won't Expand Capex


The administration claimed companies would expand their businesses following the TCJA Tax Cuts & Jobs Act. Let's check.

A National Association of Business Economics’ (NABE) surveys shows the $1.5 trillion U.S. Tax Cut has No Major Impact on Business Capex Plans.

The Trump administration’s $1.5 trillion cut tax package appeared to have no major impact on businesses’ capital investment or hiring plans, according to a survey released a year after the biggest overhaul of the U.S. tax code in more than 30 years.

The National Association of Business Economics’ (NABE) quarterly business conditions poll published on Monday found that while some companies reported accelerating investments because of lower corporate taxes, 84 percent of respondents said they had not changed plans. That compares to 81 percent in the previous survey published in October.

The White House had predicted that the massive fiscal stimulus package, marked by the reduction in the corporate tax rate to 21 percent from 35 percent, would boost business spending and job growth. The tax cuts came into effect in January 2018.

The NABE survey also suggested a further slowdown in business spending after moderating sharply in the third quarter of 2018. The survey’s measure of capital spending fell in January to its lowest level since July 2017. Expectations for capital spending for the next three months also weakened.

Where did the Money Go?

  • Stock buybacks
  • Dividends

The buybacks were a waste because valuations are insane. We did get something out of this: more debt.

The CBO says GOP Tax Law Will Add $1.9 Trillion to Debt.

According to the report, the tax law would cost the government $2.3 trillion in revenues, but economic growth would offset that figure by about $461 billion.

And as tax cuts go, this one was hugely one-sided. The middle class got peanuts.

The growth won't happen and the lost revenues will likely be worse. There were no spending cuts, and we did not even see the typical lie both sides employ: "This will pay for itself".

I am in favor of reduced taxes. But I am also in favor of balanced budgets.

Republicans are always in favor of spending cuts, provided Democrats are in charge.

Mike "Mish" Shedlock

Comments (19)
No. 1-14

Clearly the tax cuts won't pay for themselves, but, it was a smart political move. Are the democrats going to run on a platform of raising taxes?


Maybe they aren't investing because nobody knows what the tariff and trade policies will be from week to week.


"The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money." - Alexis de Tocqueville (in Democracy in America)


As someone who believes in the free market, are you suggesting that more companies should expand capex? Are you against the free market outcome?

Also, these so called corporate taxes, especially the overseas trillions, would never have been collected anyway. The 'tax cut' allows the U.S. to actually collect those taxes. That is infinitely better than collecting zilch from these 'evil' corporations in the past two decades.



"As someone who believes in the free market, are you suggesting that more companies should expand capex? Are you against the free market outcome?"

It might behoove you to take reading comprehension lessons. Where did I tell companies what to do? Where did I even hint at that? Rather, I stated a claim that was made and it didn't happen.