Economics
Trump’s Tax Cuts Have Boosted Bottom Lines, But Not Much Else
- Firms are using savings to boost net margins instead of capex
- General Motors to Lowe’s face rising costs amid trade disputes
Photographer: Luke Sharrett/Bloomberg
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Critics of President Donald Trump’s tax law centerpiece -- slashing the corporate rate -- argued the savings wouldn’t spur big companies to expand dramatically. One year later, some key metrics show they were right.
For companies in the Standard & Poor’s 500 Index, the profits they’ve made from sales this year through September -- after accounting for production costs but before paying taxes -- have been flat. But, their net profit margins -- which include the tax savings -- have continued to climb. If they were spending more to hire workers and build U.S. factories, those net margins would be lower.