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Tax Reform Made Me Do It!


  • Michelle Hanlon
  • Jeffrey L. Hoopes
  • Joel Slemrod


This paper examines corporations’ actions, and statements about actions, following the tax law change known as the Tax Cuts and Jobs Act (TCJA). Specifically, we examine four different outcomes—bonuses (or other actions that benefit workers), announcements of new investments, share repurchases, and dividend announcements. We find that 4% of public firms in our sample announced in Q1 2018 they would pay some portion of their tax savings toward workers. In terms of investment, we find that 22% of the S&P 500 firms in our sample mentioned in earnings conference calls that they would increase investment because of the TCJA. We find a general increase in share repurchases following the passage of the TCJA, but the increase is extremely concentrated in a small number of firms. We find only nine firms that announced a new share repurchase plan explicitly attributed the new plan to the TCJA. In regression analysis, we find that both political and economic variables explain TCJA-linked announcements. The analysis suggests that firms with greater expected tax savings from the TCJA are those most likely to announce payments to workers and plans to increase investment. Firms with a Political Action Committee that donates more to Republican candidates are also more likely to announce benefits to employees.

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  • Michelle Hanlon & Jeffrey L. Hoopes & Joel Slemrod, 2018. "Tax Reform Made Me Do It!," NBER Working Papers 25283, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:25283
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    Cited by:

    1. Dorine Boumans & Clemens Fuest & Carla Krolage & Klaus Wohlrabe, 2020. "Expected effects of the US tax reform on other countries: global and local survey evidence," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 27(6), pages 1608-1630, December.
    2. Fabio B. Gaertner & Daniel P. Lynch & Mary E. Vernon, 2020. "The Effects of the Tax Cuts & Jobs Act of 2017 on Defined Benefit Pension Contributions," Contemporary Accounting Research, John Wiley & Sons, vol. 37(4), pages 1990-2019, December.
    3. Emanuel Kopp & Daniel Leigh & Susanna Mursula & Suchanan Tambunlertchai, 2019. "U.S. Investment Since the Tax Cuts and Jobs Act of 2017," IMF Working Papers 2019/120, International Monetary Fund.
    4. Fabio B. Gaertner & Jeffrey L. Hoopes & Braden M. Williams, 2020. "Making Only America Great? Non-U.S. Market Reactions to U.S. Tax Reform," Management Science, INFORMS, vol. 66(2), pages 687-697, February.
    5. Anantharaman, Divya & Kamath, Saipriya & Li, Shengnan, 2021. "The Tax Cut and Jobs Act (2017) as a driver of pension derisking: a comprehensive examination," LSE Research Online Documents on Economics 108535, London School of Economics and Political Science, LSE Library.

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    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies

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