The success of the most far-reaching U.S. tax overhaul in decades will depend on whether American companies invest their tax windfall on expanding hiring and production capacity or save it for dividends and share buybacks that, while they increase shareholder value, do little for economic growth, according to three PGIM thought leaders.
The 2017 Tax Cuts and Jobs Act—most notable for its significant 14 percentage point cut on corporate taxes to jumpstart the Trump administration’s job creation efforts—was signed into law by the president three days before Christmas. Expectations are equally significant for the stimulus the legislation will have on the U.S. stock market and economy in the new year.