The Good, The Bad and The Tax Cuts

May 8, 2018
Originally published on May 9, 2018 4:11 pm

When Republicans in Congress passed a big corporate tax cut in December, they hoped it would incentivize companies to invest more money in equipment, new buildings, research, and software.

This kind of investment would help workers be more productive, making it possible for them to receive bigger raises. Critics of the tax cut responded that companies would just give the money they saved to their shareholders, by buying back their own shares.

Who's right? Is the tax cut working? Are businesses investing more because of it, or are they just enriching their already-rich owners? Stacey and Cardiff pick opposite sides of the debate — well, a coin-flip picks for them — and prepare to unholster their indicators for a showdown at high noon. Or late-ish Tuesday afternoon... whatever.

Links:

Technology companies are driving a capital spending surge

GDP: first quarter 2018 (see page 14, nonresidential fixed investment)

Tax windfall going to capex faster than to buybacks

Institute for Supply Management forecast

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