How the Tax Cuts and Jobs Act Changed Corporate Behavior

In this episode, Lucas and Luna dive into a specific, lasting effect of the 2017 Tax Cuts and Jobs Act: how the reduction in the corporate tax rate from 35 percent to 21 percent reshaped business investment, share buybacks, and debt financing. They focus on the behavior of S&P 500 companies in the years following the law, citing data from the Congressional Research Service showing that the effective tax rate for large firms dropped to about 11 percent by 2019 due to deductions and loopholes. Lucas argues that the rate cut did not lead to a proportional boom in capital expenditure as promised, but instead fueled a surge in stock buybacks and debt-fueled M&A. Luna pushes back with evidence from the Federal Reserve that investment in equipment did rise modestly, but mostly in industries like tech and energy. They also explore how the law's international provisions, particularly the GILTI and FDII rules, continue to influence corporate location decisions and profit shifting as of mid-2026. #TaxCutsAndJobsAct #CorporateTax #StockBuybacks #BusinessInvestment #GILTI #FDII #TaxReform #S&P500 #Economics #FexingoBusiness #BusinessPodcast #TaxPolicy #CongressionalResearchService #FederalReserve #CapitalExpenditure #DebtFinancing #ProfitShifting #CorporateBehavior Keep every episode free: buymeacoffee.com/fexingo