The GOP’s Corporate Tax Cuts Haven’t Led to Substantial Investment

JM Ashby
Written by JM Ashby

This probably shouldn't come as a surprise. Trump's former top economic adviser Gary Cohn once asked a full room of executives (pictured above) if they planned to turn their tax cuts into investments and only a handful raised their hands.

A new survey of over 200 corporate firms found that two thirds of them have made no change in investment strategy at all and some have even revised their investments downward.

From Business Insider:

A new survey published by the Federal Reserve Bank of Atlanta in conjunction with Stanford University and University of Chicago Booth School economists shows the new policy measures have done little do bolster corporate investment plans.

"In our February survey—which was in the field from February 12 through February 23—we asked firms, 'How has the recently enacted Tax Cuts and Jobs Act led you to revise your plans for capital expenditures in 2018?' The results shown below—restricted to the 218 firms that responded in both November 2017 and February 2018—suggest that, if anything, these firms have revised down their expectations for this year."

The survey found that large corporations with more than 500 employees have made some meager investments, but smaller companies which account for most of American business have not made substantial changes.

You may recall that Republicans pitched their tax cuts as relief for small business.

Meanwhile, the Wall Street Journal reports that Wall Street banks have received their largest bonuses since before the 2008 financial crisis.

The average banker bonus in New York City was $184,220 last year, the biggest annual haul for Wall Street employees since before the financial crisis. [...]

The jump, the largest in percentage terms since 2013, continues a long rebound for New York City securities-industry bonuses from their postcrisis nadir in 2008, when they averaged just over $100,000, according to the annual report by the Office of the New York State Comptroller. Last year’s average payout was just shy of the high of $191,360 in 2006.

The economists behind the Federal Reserve survey stated the obvious by saying the lack of investment will limit any potential economic growth the GOP's tax cuts could have contributed to.

Harvard economists recently estimated that the tax cuts will add only 0.04 percent economic growth per year and this survey seemingly corroborates that.

I don't think you have to be economist to understand that the tax cuts won't add a meaningful amount of economic growth if the rich simply pocket all of it. It was always going to turn out this way because that's how it always turns out.

  • muselet

    What? You mean to tell me corporations haven’t responded to their tax cut in the way the supply-side charlatans predicted?

    Why, you could knock me over with a proverbial.


  • 1933john

    Take the money and run!

    • Tony Lavely

      Took the money and ran.

      • 1933john

        SS ?

  • gescove

    Here’s my shocked face 😐

    • Aynwrong
      • gescove


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