Tax Reform: Good For Shareholders,,,As for the Rest of the Country..?

As I (and I was most certainly not alone) it seems the vast majority of the cash coming back to the US because of tax changes will result most dramatically in an increase in stock buybacks and increased dividends. Economists may be divided on the impact in terms of new plants and equipment and jobs,,,but most of the the money is alreadt showing up in stock buybacks and dividends. This is definitely good for the stock market giving it a further support.

From the NYT  (my bolds)

Trump’s Tax Cuts in Hand, Companies Spend More on Themselves Than on Wages

President Trump promised that his tax cut would encourage companies to invest in factories, workers and wages, setting off a spending spree that would reinvigorate the American economy.

Companies have announced plans for some of those investments. But so far, companies are using much of the money for something with a more narrow benefit: buying their own shares.

Those so-called buybacks are good for shareholders, including the senior executives who tend to be big owners price.

• 
  
  
  

  ...in 2005, when a one-time tax holiday allowed companies to repatriate money on the cheap. That plan, championed by President George W. Bush, was sold as a way to get American companies to invest more in the domestic economy.

  Some $300 billion came back to the United States that year. But economists estimated that as much as 92 percent of it may have been paid out to companies’ shareholders — mostly in the form of buybacks.

  Studies have shown that the tax change lifted companies’ stock prices but did not expand their American work forces.

  Until the early 1980s, the practice of buying shares with corporate money was considered borderline illegal because it was thought to potentially open the company up to charges of manipulating share prices.

  But in 1982 the Securities and Exchange Commission adopted a rule that gave the green light to most share repurchases, as long as they followed certain rules.

  
  

  “We have some causal evidence that because of short-termism companies are doing some stock repurchases that maybe they shouldn’t do,” said Heitor Almeida, a professor of corporate finance at the University of Illinois at Urbana-Champaign. “And maybe that’s causing them to reduce investment.”

  
  
  
  
  

  A version of this article appears in print on February 27, 2018, on Page B1 of the New York edition with the headline: Tax