Corporate tax cuts could boost shareholders’ balance sheets
Corporate tax cuts could boost shareholders’ balance sheets
The corporate tax cuts included in the Republican tax bill — including a statutory corporate tax rate reduction to 21 percent from 35 percent, lower rates for pass-through businesses, elimination of the corporate alternative minimum tax and a tax holiday for repatriated profits — would deliver a windfall to many American companies. Those that are publicly traded will likely pass much of their increased after-tax revenue on to shareholders in the form of dividend distributions and share buybacks. That could likely boost stock prices overall. But it wouldn’t necessarily boost the economic prospects of most Americans. Only about 14 percent of Americans own stock directly, according to New York University economist Edward Wolff, and those asset owners are concentrated at the top of the income ladder. The top 5 percent of taxpayers earn 68 percent of dividend income and 87 percent of long-term capital gains, according to economist Kimberly Clausing at Reed College. And while 40 percent of American workers have a 401(k)-type retirement account that is invested partly in the market, Wolff points out that gains from those investments aren’t immediately available to boost people’s consumer spending or living standards.
Click the audio player above to hear the full story.
Stories You Might Like
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.
