Corporations Reinvest Savings from Lower Tax Rates to Maximize Profits

Supporting Evidence

This study examines how the 2017 Tax Cuts and Jobs Act (TCJA) influenced corporate investment behavior. It finds that firms receiving significant tax benefits from the TCJA increased their fixed asset investments the following year. The rise in investment was driven by higher expected earnings and one-time tax gains. The effect was strongest among firms with higher capital costs and stronger alignment between management and shareholders. The OBBB makes the TCJA corporate tax cuts permanent.

See also: Corporate Tax Cuts Do Not Trickle Down

Primary Source
Source Title: Did the Tax Cuts and Jobs Act stimulate capital expenditures? A firm-level approach
Source Category: Peer-Reviewed
Source Format: Journal Article
Author(s): John D. Bitzan, Yongtao Hong, Fariz Huseynov
Publication Title: Applied Economics
Volume: 56
Issue: 59
Pages: 8785-8801
Publication Date: December 22, 2025
DOI: 10.1080/00036846.2023.2293673
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