Tax Reform Made Me Do It!
Name
703226.pdf
Description
Published version
Size
1.1 MB
Format
Adobe PDF
Checksum (MD5)
c2fcbabe1449102725e455349201abbc
Author(s)
Hanlon, Michelle
Hoopes, Jeffrey L
Slemrod, Joel
Date Issued
2019
Journal
Tax Policy and the Economy
Publisher
University of Chicago Press
Citation
Hanlon, Michelle, Hoopes, Jeffrey L and Slemrod, Joel. 2019. "Tax Reform Made Me Do It!." Tax Policy and the Economy, 33 (1).
Version
Final published version
Abstract
© 2019 by the National Bureau of Economic Research. All rights reserved. This paper examines corporations’ actions, and statements about actions, following the tax law change known as the Tax Cuts and Jobs Act of 2017 (TCJA). Specifically, we examine four different outcomes: bonuses (or other actions that benefit workers), announcements of new investments, share repurchases, and dividend announcements. We find that 4% of public firms in our sample announced in the first quarter of 2018 they would pay some portion of their tax savings toward workers. In terms of investment, we find that 22% of the S&P 500 firms in our sample mentioned in earnings conference calls that they would increase investment because of the TCJA. We find a general increase in share repurchases following the passage of the TCJA, but the increase is extremely concentrated in a small number of firms. We find only nine firms that announced a new share repurchase plan explicitly attributed the new plan to the TCJA. In regression analysis, we find that both political and economic variables explain TCJA-linked announcements. The analysis suggests that firms with greater expected tax savings from the TCJA are those most likely to announce payments to workers and plans to increase investment. Firms with a political action committee that donates more to Republican candidates are also more likely to announce benefits to employees.
MIT Department
Sloan School of Management
Terms of Use
Article is made available in accordance with the publisher's policy and may be subject to US copyright law. Please refer to the publisher's site for terms of use.
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DOI of Published Version
https://doi.org/10.1086/703226
