In December 2017, Congress passed Trump's Tax Cut and Jobs Act, a $1.5 trillion tax cut, cutting government revenue. The President and Congress claimed the corporate tax cuts would benefit everyone because businesses would invest or use the tax cut to raise wages.
TAX CUTS will increase investment in the American economy and in U.S. workers, leading to higher growth, higher wages, and more JOBS! - Donald Trump tweet
But so far, the cuts have not been led to an increase in labor share or more investments. The Federal Reserve Bank of Chicago’s current capital spending index indicates private business investment plans have remained negative since 2015. The most certain effect of the tax cuts has been to help fuel a massive increase in the federal deficit and debt. So where is all the money saved from corporate tax cuts going? First, to companies’ bottom lines and second to stock buybacks
, which is at a record high. Buybacks are attractive because most CEO pay is directly linked to stock values and not to productive capital expansion. Increasing pay for the wealthiest Americans and reducing their taxes will boost equity values, but America’s inequality will get worse.
Trump's tax cut is just a massive giveaway to corporations.