Did the Tax Cuts and Jobs Act Really Lower Corporate Taxes? Preliminary Evidence from the SP 500 and Apple Inc

The Tax Cuts and Jobs Act (TCJA) of 2017 modified several aspects of corporate income tax rules, including a key change to the treatment on foreign-generated earnings. Preliminary results from the authors' investigation suggest the TCJA was successful because large corporations "repatriated" a large portion of their cash held overseas. The analysis shows that the TCJA increased the tax burden for U.S. companies with substantial foreign earnings while reducing the tax burden for those with mostly U.S.-based earnings. Investment activity as measured by capital expenditures showed no significant change after implementation of the TCJA whereas share repurchases increased substantially, suggesting that repatriated overseas cash was not needed for investment purposes as was claimed by the TCJA's proponents.